Business Standard 05.08.2013
Infrastructure betterment tax likely in Mumbai
Mumbaikars residing along or in the vicinity of the upcoming
transport infrastructure projects might have to pay a betterment tax.
planning and nodal agency for the projects, had proposed this new cess
last year, to part-finance the capital expenditure. State Chief Minister
Prithviraj Chavan is agreeable in principle to this tax, but the government is yet to take a decision.
However, the realty sector is against it, saying the timing would be a problem, with the sector passing through rough weather.
MMRDA estimates Rs 80,000 crore is needed to implement the ongoing and
new projects to upgrade the metropolis’ transport infrastructure. These
projects include the mono rail, metro rail,
freeways, sea links, coastal roads and elevated corridors. It had
mooted the betterment tax on the lines of a similar levy in Singapore
and some European countries.
Its joint director for projects, Dilip Kawathakar, told Business
Standard: “MMRDA’s proposal is being discussed by the state government.
The urban development department will finalise a blueprint for this cess
and thereafter it will be launched.”
Another official, who did not want to be named, said the government woud
decide the rate and who has to pay. “The government will decide if the
recovery is to be from new residential, commercial and industrial
properties or the existing ones along and in the vicinity of various
projects. One possibility is that people who own houses and run
commercial establishments along or in the vicinity of infrastructure
projects may have to pay 10 per cent of the saleable value of their
properties as betterment tax. The tax will be used to further strengthen
transport infrastructure in Mumbai.” The official noted that property
prices along and in the vicinity of various infrastructure projects had
surged.
Yomesh Rao, director, Consultants Ltd, said property buyers were already
paying a number of taxes and duties. “Property developers will
certainly pass on its burden to buyers. This will increase the realty
prices,” he said.
Anand Gupta, secretary, Builders Association of India, said he was
appealing to the government to reconsider the proposal. ”The realty
industry’s problems will further increase. Already, builders and
developers are accused of inflating property prices. If the betterment
tax is recovered, it will be passed on the buyers and property prices
will increase,” he confirmed.
