The regulation that will change the way, Mumbaikars pay property tax is expected to be tabled before the state legislature in the following week. The new regulation, based on the capital value-based system, is expected to equalise property tax in the city and suburbs. “The sole aim is to reduce the difference in property tax between the city and suburbs,” Maharashtra’s minister of state for urban development Rajesh Tope informed the Legislative Council on Friday.
The new Bill will introduce a capital-based system for calculation of taxes instead of current rateable system, Mr Tope said. Mumbai still follows the rateable value-based system introduced in 1888 by the BMC Act, wherein the property tax is calculated on the basis of the rent.
The proposal to switch to the capital value system is based on a study conducted by the Tata Institute for Social Sciences (TISS) and the University of Mumbai. TISS had estimated that the switch to this system would improve the tax collection by up to 200%. Old buildings in the island city, where rents are frozen due to the Rent Control Act, have to pay a pittance as property tax even though capital values in the island city are very high.
More : economictimes.indiatimes.com
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