BMC is planning to put up property tax related guidelines on its website (www.mcgm.gov.in) by May 25. This will contain information related to tax and the ratable value of a property. The main objective is to bring in simplicity, transparency and uniformity related to property tax.
BMC, after holding discussions with different institutions and citizen groups will put up business rules on its website. This is scheduled to be done by July 1. The move is likely to help property owners do self-assessment of their properties.
In order to bring rationality to property tax structure and added revenue that is generated, BMC has decided to impose laws that will make it mandatory for the landowners to disclose their earning through rents and related sources. This will also let BMC earn additional revenue.
Tenants will be sent notices by BMC‘s assessment and collection department (ACD) to confirm the rents they have declared. The notices will be issued to old as well as new tenants. Nisar Ahmad Pathan, Joint assessor and collector informed the media that tenants will have to revert within 15 days from the date the notice has been served. In case, they fail to reply, they will be sent a reminder. In case of repeated failures, legal department can be taken actions against the faltering.
Pathan added that tenants and owners suppress valid documents to evade taxes. “In such situations it becomes difficult to arrive at a right tax amount. In such case, we will take into account the prevalent rates in the locality and will then compute appropriate deductions as per the assessment of assessing officer judges. ”
Certain fixed criterions will decide how deductions will be computed. For example, flat condition (furnished/semi-furnished), available facilities in society (lift, genset, etc.) will be taken into account. “We will see the agreement clauses to compute ratable value to determine how much deductions should be given on the paid rent. These steps will ensure that both owner and tenant share the burden of taxes.” Pathan said.
The deduction can range from 40 % to 60 % of the actual rent that is being paid for the premises. In case repair works have been undertaken, the assessee may get up to 10% standard deduction. The ratable value of the property can then be calculated by multiplying the net amount by a factor of twelve. On this ratable value, tax could then be levied that will be equal to 112.5 per cent for metered commercial premises and 83.5 per cent for residential premises.
Depending upon the conditions of your property (usage, age, location, condition, physical) and the Agreement clauses, one can get a total deduction that may range between Rs 4,600 and Rs6,400 for a monthly rent of Rs. 10,000. This means that the tax liability will come to around Rs 4,509 to Rs 3,006 per month. The amount can be arrived at by multiplying the remainder value left after reducing the deductions from Rs. 10, 000 and then multiplying the value by 12.
Those who are found to falter in declaring the rent will be prosecuted under section 155 of the Bombay Municipal Corporations Act.