Applicability of old Property Tax rates for households of less than 500 sq. ft.

The Government of State of Maharashtra in its Cabinet meeting held on 27th May 2015 decided that households which own or occupy property up to 500 sq. ft. will pay property tax as per the old assessment system and there would not be any rate change for the period of next 5 years. In the sixth year 40% tax will be charged and every year after that, it will increase by 20% till the ninth year when it will be 100%. This is a major relief for many households as most of these properties are old buildings going for redevelopment under various schemes.

The old assessment system is based on ratable value of the residence which was calculated on the basis of the rent a residence could fetch. In April 2010 the local municipality of Mumbai i.e. Brihanmumbai Municipal Corporation (“BMC”) changed the Property tax assessment system to capital value based on the type of location, construction and area in sq. ft. of the residence. As per the new assessment formula, property tax for Mumbaikars has increased by around 40% as per section 140 A of BMC Act, 1888.

The implementation of the above would be effective from 1st April 2015. An ordinance will be promulgated in respect of the same by the Chief Minister.

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