MUMBAI: Property owners in Mumbai have received interim relief from a new capital value-based property tax regime that may increase taxes by up to 300 per cent, with the Bombay High Court intervening in the matter.
The high court has allowed property owners in Mumbai and its suburbs to pay taxes as per old rates along with a 25 per cent differential between the old and proposed system until a final decision is made. Several entities including the Property Owners' Association had in October moved the court against the imposition of the new property tax regime with retrospective effect from April 2010.
The proposed tax calculation system is based on the capital value of the property, factoring the readyreckoner value on the basis of age, price, location and type of property.
The earlier system was based on a ratable value that represents annual rent the property is or can be leased out for. The new tax system has proposed property tax of 0.35 per cent of capital value on residences, 1.3 per cent of capital value for offices and 2.6 per cent for banks.
Property owners in different petitions said that the new system would increase their tax outgo by 100 per cent- 300 per cent, hurt the city's redevelopment market and force many people to move outside the city. The state government has not yet filed its response to the court's notice. The same is now expected by January 16.
The court will hear the matter next on January 29. The capital value-based property tax system is expected to impact more than two lakh self-occupied, leased and vacant properties in the city. The civic authority had earlier extended the deadline for paying the taxes to June 30, 2013 following 35,000-odd complaints.
Apart from the Property Owners' Association, the Parsi Punchayat Funds and Properties, Indian Hotels, the Foundation for Medical Research and Mota Mandir Trust are among the entities that have challenged the new property tax system.
Five Parsi trusts had moved the court against the new system in October, saying the levy of tax on capital is unconstitutional, exorbitant and confiscatory in nature.