Property owners oppose MCGM’s tax formula

Mumbai

Mumbai-based Property Owners Association is going to challenge the Municipal Corporation of Greater Mumbai’s recently revised basis and method ofproperty tax computation.

The Bombay High Court has admitted the association’s plea while allowing the civic authority to file its reply byNovember 11. This matter will be clubbed along with the petitions of Bombay Hospital Trust and five Parsi trusts that challenged the stringent tax levied by the civic authority.

Property owners are opposing the revised method of property tax computation.

The association is representing over 8,000 members across Maharashtra. “The outcome of these cases is likely to impact hundreds of Mumbai properties owned by individual property owners, charitable trusts and religious entities and the methodology of computing taxes for these properties,” said Homiar N Vakil, partner of Mulla & Mulla & Craigie Blunt & Caroe, a law firm representingproperty owners and Parsi trusts in the matter.

The petition is seeking a stay on implementation of the revised basis and method of property tax calculation.

According to the petition filed by the association, the levy of property taxes under the said Act should take into account the paying capacity of the owner of the property. Earlier, five Parsi trusts based in Mumbai also approached the court challenging the civic authority’s notices on property tax levied on the base of capital value as against ratable value.

The earlier tax calculation system which was applicable until April 2010 was based on a ratable value, while the new system will be based on the capital value of the property factoring the ready reckoned value.

Ratable value of the property represents the annual rent which the property is leased out for. Under the new system, for commercial properties the tax rate is fixed at 1.3 per cent of capital value, while for the residential segment it is 0.35 per cent. “Under the earlier system, charitable organisations were offered certain concessions and those are not available in the new capital value system.

Source: The Economic Times, Mumbai