Bombay HC Scraps Rule That Allowed BMC To Levy Property Tax On RR Rates

Mumbai residents may have to pay less as property tax as the Bombay High Court (HC) on April 24 struck down three crucial rules of the Maharashtra Municipal Corporation Act, 1988, based on which the Brihanmumbai Municipal Corporation (BMC) imposed the levy so far.

The BMC amended the Act in 2009 and switched to the new methodology of assessing tax liability and switched In April 2010, the BMC had moved to the new assessment rule in order to bring parity in the system.

“Rules 20, 21 and 22 of the Capital Value Rules of 2010 and 2015 are struck down as they are ultra vires to the Corporation Act. All assessments and bills issued under these rules stand quashed and set aside," the HC ordered.

The HC also said that there was no provision for BMC chief to frame rules for laying down guidelines for property tax assessment. "There is no provision which enables the civic body commissioner to frame rules for laying down guidelines for determining capital value," the HC said. 

The HC also ordered that the corporation will have to consider factors such as  nature of land, type of land or structure, area, user category (residential or commercial) and its age, when assessing the capital value of the property. 

The HC was hearing a bunch of petitions filed by a homeowners’ association, developers’ associations and charitable institutions filed against the city’s municipal corporation and the state government. The petitioners challenged the property tax assessment rules that raised the bills of some to over Rs 10 crore, saying tax liability was being calculated based on ready reckoner rate that doesn’t indicate the real value of an individual property.

Ready reckoner rates in some Mumbai localities, including Bandra, Andheri, Juhu, Girgaum Chowpatty, Mahim and Malabar Hills, are higher than the market rates. These rates vary across the city depending upon the type of the property, market value of the area and the facilities available.

The HC, however, upheld the Constitutional validity of the 2009 amendment made to the Corporation Act.

Also Read: New Flat Owners In Mumbai To Get Individual Property Tax Bill