Pay property tax by June 30 or you’ll be fined 2% of bill amount Charitable Bodies, Elderly Burdened By New Tax System

Mumbai: The municipal body's decision to extend the due date for payment of property tax bill from March 31 to June 30 has come as a temporary relief for citizens. But the fundamental issue of paying bills with retrospective effect from April 2010 and the alleged faulty capital value method of computing the tax still exist. 

    Moreover, now the Brihanmumbai Municipal Corporation (BMC) has decided to impose a penalty of 2% per month on those who do not pay the bills by June 30. 
    Citizens are still unconvinced about the new system. 
    "The extra three months are welcome, but it doesn't solve the core issue of the formula itself, where property tax is computed on the basis of the Ready Reckoner rate, which is faulty, irrational and discriminatory. Residents living on a property in the suburbs end up paying more than those living on a property in south Mumbai," complained advocate Godfrey Pimenta, who lives in Marol. 
    The new property tax system has adversely affected senior citizens, too, who live on pensions. 
    While the New Delhi Municipal Corporation provides concessions on property tax to senior citizens, the BMC does not 
    "With inflation rising every year, it will become very difficult for retired senior citizens to bear the heavy tax burden. As such, they should be granted concessions," said Pimenta. 
    Coleman Pereira, a senior citizen from Pali Village in Bandra (W), said that retired people live on their meagre savings and will face difficulty paying the hefty taxes. 
    "Our pension doesn't increase in accordance to inflation. So, if the rate of inflation has increased by 10%, my earning through pension does not rise from Rs 100 to Rs 110,"explained Pereira, who lives in a cottage in Pali gaothan. 
    "If property tax is computed with the capital value system, it almost doubles for my cottage doubles from Rs 3,572 to Rs 6,000 per year. The BMC has not even inspected my premises. My house has load-bearing walls, but is classified as an RCC construction," he said. 
    Charitable organisations and religious institutions, who are dependent on charity to help orphans, disabled and senior citizens, complained that the new property tax system will burden their resources. 
    St Catherine's Home in Andheri (W) and Holy Cross Church in Kurla have received staggering bills amounting to lakhs. "We have got a bill of Rs 7 lakh with retrospective effect from April 2010. Catholic charitable trusts and institutions never default in paying government bills. We run our churches and institutions on donations; they are not profitable trusts. We strongly protest against the new property tax bill sent by the L ward office in Kurla,"said Father Pascal from Holy Cross Church. 
TAXING TIMES FOR MUMBAI What is the new system 
    Earlier, property tax was computed based on its rateable value, that is the rent paid by tenants. Also, the rents for old buildings in south Mumbai were frozen at amounts that existed in the 1940s. The BMC could not increase this amount and hence, south Mumbai residents paid far less property tax than those in the suburbs. While a Marol resident who lives in a 300 sqft flat with a valuation of 1.14 crore paid 13,977 as property tax annually, the owner of a 10,000 sqft flat in Colaba with a valuation of 12.74 crore paid only 5,200 a year. To bring parity, the BMC devised the capital value-based system to calculate property tax. Under this new system, the tax is calculated based on the property's current market value taking into account five factors: price of the property, the area, age of the building, type of building (commercial or residential) and type of 
    construction 
    (concrete or 
    wooden) 
Why citizens are upset 
    Mumbaikars are calling the new capital value method of computing property tax unfair and discriminatory. The base capital value of a property is linked to the Ready Reckoner (RR) rate decided by the state town planning department, which stipulates prices for specific areas such as residential, office, shop or commercial and industrial. In an RR, 400-500 plots are clubbed and given a uniform rate. The price of a property is dependent on factors such as type of construction, facilities, and surroundings such as proximity to airport. But residents complain that the ground reality that affect a property's price are not taken into consideration in the RR. The issue is being contested in an Aurangabad court. Citizens are also upset about the disparity in the tax levied on flats in the western 
    suburbs and the island city. 
    Another concern is the receipt of 
    bills with retrosp-ective effect 
    from April 2010. Senior citizens, 
    charitable organisations and 
    gaothans also feel burdened 1 in every 9 bills has an error 
Mumbai: Of the 2.70 lakh property tax bills the municipal corporation has issued since February, it has received complaints about 30,000 bills. This means, one in every nine bills issued has an error. 
    "The complaints that we are receiving are about the incorrect area of a flat, nature of use or tenancy-related issues. We are rectifying them and are also undertaking spot surveys, if needed," said a civic official. 
    The municipal cody has set up helpdesks at all 24 ward offices, where complaints regarding property tax bills will be addressed till the owner is satisfied. 
    According to sources in the civic body, the BMC has relied on old data for calculating the property tax based on the capital value system. The BMC had not carried out a fresh survey of properties before making the switch for tax calculation from rateable value — it is computed on the basis of the rent a property can get — to capital value — it is based on the market value of the property. 
    Mumbaikars said that as a property may have undergone several changes, additions or alterations over the years and in the absence of the correct data of the property, the BMC cannot send the bills based on the old records. 
    The huge number of complaints show that there are definitely discrepancies in the data with the BMC and the ground reality. 
    "How can the BMC charge us tax and not have the data on what they are charging us for? The civic body took three years to implement the new system, it should have taken some more time and done its homework better before sending us bills haphazardly," said Chembur resident Nitin Patel. 
    Civic officials claimed there were plans to conduct a fresh survey of properties in the city, but they were called off after the BMC realized that it would be a time-consuming, expensive exercise.