…. By SUDHAKAR DOKHANE
President PEATA (I)

Under the provisions of M.M.C. Act 1888, Municipal Corporation of Gr. Mumbai (MCGM) is authorised to collect property tax for immovable properties. The Assessment Department is separately established to deal with all the matters pertaining to property taxes. The tax bill consists of following heads: –

1) Property Tax
2) Water Tax
3) Water Benefit Tax
4) Sewage Tax
5) Sewage Benefit Tax
6) Municipal Education Cess
7) State Education Cess
Tree Cess
9) Employment Guarantee Cess (Rojgar Hami Yojana)
10) Repair cess (for cessed buildings) etc.

The property tax is applicable to Residential, Commercial & Industrial buildings in different proportion. The taxes for commercial users are generally double the residential use and one and half times, for industrial users.

The concept of multi-ownership development (Ownership Flat System) in Mumbai, is started in late fifties. Prior to 1960, residential development is, particularly limited to single owner. The landlords were constructing buildings and letting out premises on tenancy basis, purely from income point of view. The multi-ownership concept and unlimited and continuous protection to tenants through Bombay Rent Control Act, from time to time, had put a fullstop on construction of premises for tenants.

It is a fact that since 1960 hardly any building is constructed on single ownership basis for tenancy purpose. For last over four decades the properties are developed & being developed on multi ownership basis; jointly owned by the members of co-operative housing societies as ultimate beneficiary.

Since the properties prior to 1960 were owned by single owner, it was natural and appropriate for Assessment Department to raise single bill of property tax. However Municipal Corporation even today operates age-old single billing systems, in spite of radical change in ownership concept. This single billing is in-force for Co-operative Societies, irrespective whether it has 10 members or 100 members.

Under the provisions of MMC Act, Municipal Corporation is authorised to recover penalty for the late payment. In extreme cases, Civic Authority is empowered to attach and auction the immovable properties of the defaulters, for recovery of taxes.

It is experienced that in more than 75% of the Co-operative Societies, members do not co-operate to each other particularly in the matter of paying taxes in time. Due to lack of responsibility and self-discipline you will find at least 10% members always delay their tax payment on one pretext or the other. When Civic Authority initiates penal action, no choice is left for the Societies, but to approach the Court for relief’s; which takes years together for final judgment, resulting in revenue loss of Crore to MCGM and equal harassment and agony to the Societies. Thousands & thousands of such cases are pending in the Courts. To avoid any action, the Societies generally pay taxes from their reserve funds, of which indirect burden of tax evading members transferred to honest taxpayers. This situation arose exclusively due to recovery of taxes by single billing from multi-ownership represented by body of members.

By and large, each individual is conscious about his personal liabilities and always prompt enough to dispose of the same where his personal interests are at stake.

Against this back drop, it is beyond any stretch of imagination, as to why MCGM is still sticks to combined billing, instead of individual tax billing. Before fixing ratable value and working out property tax, the Assessment Department actually takes the measurement of each premises and records its area and then works out tax of each unit for preparing the bill. As such all basic data of each individual premises is readily available with the department.

If MCGM is really keen on recovery of property taxes in time, now time has come to discard present combined billing system by introducing individual billing as adopted by various Civic Authorities and Consumer Service Agencies in the State for decades. Following reasons are sufficient for MCGM to reviewed present billing system and to adopt single individual billing for easy and fast recovery of taxes:-

i) B.E.S.& T. undertaking -a MCGM’s owned Electric Supply Company, issues individual bills to each consumer which is adopted by other electric supply companies.
ii) M. T. N. L. issues individual bill to each telephone consumer.
iii) Mahanagar Gas company issues individual bills.
iv) Even common newspaper agent issues individual bill to their customers.
v) Pune Municipal Corporation issues Property Tax Bills to each individual, irrespective whether property is owned by single or multi ownership (Coop Hsgs).

The above agencies had adopted individual billing system; long back when there was no help of computers. When above agencies can successfully implement policy of individual billing to millions of consumers, then what is the problem with MCGM? There is no justification as to why MCGM is not interested in giving better and obligatory service to each single consumer. For a long time various Organizations are requesting MCGM for introduction of individual tax billing. PEATA (I) had also sent similar representation to Hon’ble mayor of Mumbai, on 17.8.2004 in the matter.

If the bills are issued on individual basis it will give following incentives to honest tax paying consumers & equal benefits to MCGM: -

i) The defaulting member will be held personally liable and responsible, and any action initiated by MCGM will be limited to such individual only. In the circumstances such defaulters will pay taxes in time to avoid any legal proceeding, as he/she has to fight in the court of law with personal finance.

ii) This will curtail tendency of approaching to Court by defaulting member/society, thus MCGM will save unnecessary huge legal expenses, every year.

iii) If MCGM works out a policy with suitable legal provisions to disconnect electric supply of such defaulters, MCGM will have cent -percent recovery of taxes in time.

iv) This will bring desired transparency & discipline in Assessment Department. Tendency of unwanted compromises will be eradicated, and there will be no need for MCGM to initiate legal proceedings, to attach or auction the immovable properties.

v) If consumer can pay regular bills for electricity, telephone or such services, there will not be any ground what so ever for defaulters not to pay property tax in time.

It is possible that MCGM administration may be working in the right direction, but so far no concrete policy has emerged. Interestingly, I came across a news item, where it is learnt that M.C.G.M has sent Notices to Co-op Societies for proposed change in present billing policy, without any outcome so far. Let us hope that MCGM will start giving individual bills for property taxes without making any exercise of trial and error, at the earliest, realising that individual billing of property tax will be inevitable..

Onus of payment of property tax is on the citizen, like in the Income Tax Act.

It is a computerised system driven by a software, which will enable the citizen to interact with the MCD on its website www.mcdonline.gov.in.

It gives concessions to the elderly, women, handicapped persons and ex-servicemen.

It provides for a Hardship and Anomaly Committee to settle grievances.

It provides for a Tribunal to settle disputes rather than resort to litigation in courts.

It is stable for three years and is to be revised every three years based on the recommendations of a Municipal Valuation Committee as per the amended provisions of the Act.

There is an extensive process of public hearings and dispute resolution which is a part of the new system.

The Unit Area System has worked very well in other cities like Ahmedabad, Patna, Bangalore, Chennai, and Hyderabad apart from many other cities. Hence there is a lot of experience in its efficient working. I hope the citizens will find this new system more transparent, reliable, hassle-free and efficient. This guide has been prepared to help Delhiites to file their Property Tax under the new system on time. Taxes can be paid online, at the Citizen’s Service Bureau located in each zone or in the property tax offices of the Corporation. Please pay your tax and help us to serve you better!
1. . INTRODUCTION OF UNIT AREA SYSTEM
Prior to the amendment in DMC Act, 1957 by the Delhi Municipal Corporation (Amendment) Act, 2003, properties were taxed on the basis of the annual rent at which such land or building was reasonably expected to be let out from year to year basis. The above system of determining property tax became questionable on various grounds primarily on inequity since it created wide disparity in property tax of similarly placed properties in the same locality, subjectivity in assessments and excessive litigation.

2. 2. NEW SYSTEM OF ASSESSMENT
The unit area based system, which was notified and came into force from the 1st of August 2003, will be implemented from 1st of April 2004. Property owners can self-assess their tax and submit the returns in the Form given at Annexure I. The area-based method is simple, arithmetical and transparent. It is based on fixing a unit area value per square metre of covered space for calculation of property tax. The tax for a particular property is based on the annual value of the property arrived at by multiplying unit area value assigned to the colonies/localities by the covered area of the property and the multiplicative factors for occupancy, age, structure and use.

3. 3. DETERMINATION OF ANNUAL VALUE
The annual value of any covered space of building shall be the amount arrived at by multiplying the total covered space of the building by the corresponding unit area value of the category in which the colony/area/locality is situated as given in Annexure II and the relevant multiplicative factors. In case the name of any colony/area/locality does not figure in the list, the categorization of such colonies shall be done by the Corporation according to the general guidelines laid down in this regard. In the meantime, the tax thereof may be calculated based on the categorization of the highest neighboring colony.

4. 4. CALCULATION OF COVERED SPACE
The method of calculation of covered space is explained in detail in Annexure III. A list of architects registered with the Corporation who can be contacted for measurement and certification of the covered area in case the covered area is not readily available has been placed on the website of the Corporation www.mcdonline.gov.in. Such architects can be paid a negotiable fee @ 10% of the tax of the property measured and certified by them. For plots below 100 sq. mtrs. the property tax is to be calculated by taking the covered area as given in the table at Annexure-IV. A ready reckoner for calculation of property tax from covered area up to 100 sq. mtrs. is given at Annexure IV-A & IV-B. The tax can be calculated after multiplying the factors and deducting the rebates as admissible.

5. 5. UNIT AREA VALUES

Category A B C D E F G H

Value: (in Rs. Per square metre) 630 500 400 320 270 230 200 100

The Unit Area Value for vacant land in excess of 75% of the total plot area i.e. where the construction on the ground floor is less than 25 % of the plot area would be computed at a factor of 0.3 of the base unit value of the colony. However there would be no vacant land tax for the year 2004-2005. The above Unit Area Values would be valid for the next three years, viz., 2004 – 05 to 2006 – 07.

6. 6. MULTIPLICATIVE FACTORS

A. Structure Factor (SF)
Structure type Pucca Semi Pucca Kuchcha
Factor (SF) 1.0 1.0 0.5

Pucca: buildings with load bearing roof
Semi-Pucca: buildings having a non-load bearing temporary roof
Kuchcha: buildings using temporary material for wall & roof

B. Age factor (AF) – For rebate on age of buildings
Year of completion Prior to 1960 1960 to 1969 1970 to 1979 1980 to 1989 1990 to 1999 2000 onwards
Factor (AF) 0.5 0.6 0.7 0.8 0.9 1.0

C. Occupancy factor (OF) – For tenanted properties
Category A B C D E F G H
Factor (OF) 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0

D. Use factor (UF)For Non-residential uses:
Use I II III IV V
Factor (UF) 1 2 3 4 10

(I)Public Purpose (II) Public Utility (III) *Industry, Entertainment, Recreation and Clubs (IV) Business, Restaurants, Hotels upto 2 Star (V) 3 Star and above Hotels/ Towers/Hoardings
* Only for the space actually used for manufacturing activity. Other space like office or residential quarters, etc. shall attract the factor(s) as applicable to them. Definitions of use-wise categories of buildings as notified in the Property Tax Bye-laws 2004 is given in Annexure-V.

7. 7. UNIT OF ASSESSMENT
1. 1. Every building and every vacant land shall be assessed as a single unit. However where portions of any building or vacant land are separately owned so as to be entirely independent and capable of separate enjoyment, notwithstanding the fact that access to such separate portions is made through a common passage or a common stair case, as the case may be, such separately owned portions may be assessed separately.

2. 2. All buildings, to the extent they are contiguous or are within the same connectedness or are on the same foundation and are owned by the same owner or co-owners as an undivided property, shall be treated as one unit for the purpose of assessment. However if any such building is sub-divided into separate shares which are not entirely independent and capable of separate enjoyment, the Commissioner may, on application from the owners or the co-owners, apportion on the payment of a fee of Rs. 100 the valuation and assessment of such building among the co-owners according to the value of their respective shares, treating the entire building as a single unit

3. 3. Each residential unit with its percentage of the undivided interest in the common areas and facilities, constructed or purchases and owned by, or under the control of, any housing co-operative society registered under any law regulating co-operative housing for the time being in force, shall be assessed separately.

4. 4. Each apartment and its percentage of the undivided interest in the common areas and facilities in a building within the meaning of any law regulating apartment ownership for the time being in force, shall be assessed separately.

5. 5. If the ownership of any vacant land or building or any portion thereof is sub-divided into separate shares, or if more than one adjoining vacant land or building or portion there of comes under one ownership by amalgamation, the Commissioner may, on an application from the owner or the co-owner, as the case may be, separate, or amalgamate, as the case may be, such vacant land or building or portion thereof..

6. 6. Notwithstanding any assessment made in respect of any vacant lands or buildings before the commencement of the Delhi Municipal Corporation (Amendment) Act, 2003, the Commissioner may, on his own or otherwise amalgamate, or separate, or continue to assess, such vacant lands or buildings or portions thereof.

7. 7. The Commissioner shall, upon an application made in this behalf by an owner, lessee, sub-lessee, or occupier of any vacant land or building and upon payment of such fee as may be prescribed in the bye-laws, furnish to such owner, lessee, sub-lessee, or occupier, as the case may be, information regarding the apportionment of the property tax on such vacant land or building for the current period assessment or for any preceding period of assessment.

8. 8. REBATES & CONCESSIONS
a) a) Rebate for Senior citizens, women owned properties, physically challenged persons and ex-servicemen: A rebate of 30% of the tax due on the covered space of such building up to one hundred sq.mtrs. of the covered space has been allowed by the Corporation in the case of any self-occupied residential building singly owned by a man who is sixty-five years or more in age or by a woman irrespective of her age, ex- servicemen or a physically challenged person as defined in the bye-laws, irrespective of age, or jointly owned by any of these categories. Such rebate shall not be available for more than one residential building within the jurisdiction of National Capital Territory of Delhi
NB: Only one Rebate can be availed even if a person is eligible for more than one rebate/concessions as listed above. Rebate/concession is only available for self-occupied portion of the premises. For the purpose of the above rebate a senior citizen means a person above the age of 65 years: a physically challenged person means a person with disability (equal Opportunities, Protection of Rights and Full Participation) Act, 1995, (1 of 1996) who has been issued a certificate by the prescribed authority under the said Act.

b) b) Rebate for Timely Payment:

(i) (i) The payment of tax due in lump-sum in one installment during the first quarter of the year, (i.e., April – June) would entitle one to a rebate @ 15% of the tax paid.
(ii) (ii) No rebates would be given on payments made in quarterly installments.
(iii) (iii) Late payment invites penal interest @ 1% per month or part of the month after the due date of each quarter in which the tax was due.

c) c) Concession for small flats: A factor of 0.9 would be applied to the annual value of the flats whose total covered area (including common areas) is 50 sq. mtrs. or less.

9. 9. SELF-ASSESSMENT AND CALCULATION OF TAX UNDER UNIT AREA METHOD
In the old system of property taxation the onus for raising demand rested with the Corporation and unless a demand was raised and bill issued, the owner was not liable for payment of the property tax. In the new system of property taxation, concept of self-assessment has been introduced for the first time whereby, the onus for filing returns and paying taxes will be of the owner or occupier as the case may be. Property tax can be self assessed by the individual property owners or by any other person liable to pay the tax in the following manner:-

Step 1: Measure the covered area of the property

Step 2: Take the unit area value of the locality/category notified by the Corporation.

Step 3: Calculate the annual value by using the following formula:
Annual value = Unit Area Value X Covered Area X Multiplicative Factors
[ OF AF, SF, UF]

Step 4:In cases where different portions of property are put to different uses or where the other parameters like concessions/rebates applicable are different, the annual value will be calculated for each such portion separately.
Annual Value (AV) = (AV of Portion 1) + (AV of Portion 2) + …………….

Step 5:Calculate tax by multiplying the above value by the respective rate of tax as notified by the Corporation for the year 2004 – 2005. From this deduct any rebates or concessions applicable.
Tax = (Annual Value X Rate of Tax) Minus Rebates/ Concessions applicable

The Rates of tax for respective categories are as under:
A) Residential Properties
• 10% for categories A to E
• 6% for Categories F to H
B) Non Residential Properties
• 15%
C) Three Star & above Hotels/Towers/Hoardings
20%
Some examples of tax-computation are given at Annexure IV-C.
The above self-assessment shall be treated as assessment for the purposes of the Delhi Municipal Corporation Act, if the Commissioner does not issue any notice under section 123 C of the Act within twelve months after the year to which such self-assessment relates.

Subjectivity and relevance of valuations of capital need to be in parlance with real appreciations

By Ubaid Parkar

The 72nd Legislative Assembly Bill states that the Commissioner may fix a capital value by taking into consideration the nature and type of a land and structure of a building and the area of land or Floor Space Index (FSI) of a building. The Commissioner shall initially refer to the Stamp Duty Ready Reckoner the initial phase. Ad-hoc arrangements such as these are the precursors for chaos.

Furthermore, if the Ready Reckoner does not exist for a particular area, then the market value of the building or the land will be used as base value. In Real Estate, land is a stock and should be valued at cost price and not on the fabricated market values more often appreciated unreasonably by developers through speculative transactions, a bane to the sector which is the cause of vague conditions in the market.

Depreciation is an implicit factor which has to be taken into consideration of old developments or new additions to the land or building. It already has defeated the Real Estate sector in determining the prices of homes today, and now it’s on the course of defeating yet another unworthy adversary.

The value as per the Bill will be calculated by considering the following bases:
• The nature and type of the land and structure of the building
• Area of land or carpet area of building
• User category, – two broad categories of residential and commercial developments, and the commercial segment is further diversified into other classes like offices, hotels up to four stars, hotels of more than five stars, banks, industries and factories, schools and colleges or any other educational institutes, shops, malls, hotels, etc.
• Age of building

The carpet area is another area of subjectivity which valuation so very much adores. A standard rate of carpet area will differ from the Built Up and Super Built Up rates that developers offer today. This creates a duality in the values, further validating a cost factor to be utilized. But then again there will be schools of thought that may label this as contentious.

The age of the building again depends on the complete redevelopment of the building; the development of the vicinity, civic amenities, and the list could go on. How are these factors to be quantified can be a mathematical nightmare and a mathematicians delight.

The Commissioner is the sole valuator of the above, without any provisions of checks-and-balances with only references such as Ready Reckoner, the use of which could be subject to litigation, and past data to go by, and discrepancies in carpet areas within developers further complicates issues.

Obviously, what it needs is widespread criticism to gain grounds and it may see a maximum uproar from South Mumbai rather than the suburbs, as their rents were frozen almost seven decades back under the Maharashtra Rent Control Act.

Mumbai and India for that matter are apathetic to such situations till the water goes over. Such decisions are accepted with a fatalistic view and are designed to be hidden behind legal terminologies and jargons intended to confuse the general public. If any furor from South Mumbai does arise, it has to trickle down into the suburbs to gather ground and scrap, if not perhaps revise some of the indoctrinations by the so-called technocrats.

By Santosh Kumar & Sunit Gupta
Authors of the Stamp Duty Ready Reckoner & Market Value of Flats in Mumbai.

In order to understand the proposed property tax on capital value system, it is pertinent to first understand the present rateable value system. If we broadly understand the present rateable value system, it will be easy to review the capital value system as proposed by the Municipal Corporation of Greater Mumbai, after extensive study and research done by the eminent persons specialized in the property tax and related matters.

Rateable value system.

In the rateable value system, the property tax is charged on the basis of the rent which the rental property is likely to fetch. The rental value of any property is the rent that it earns to the owner. However, if the same property is self occupied, it’s rental value is a notional value which is very much different than it’s actual rental value, if it is given on rent to others. As such in the rateable value system properties are divided into two categories and treated differently for tax purpose.

1. Self occupied property.
2. Tenanted property.

Self occupied property.

The Municipal Corporation has prepared the schedule of rates for rental values of the self occupied buildings/buildings belonging to the Co-op Hsg. Societies. This schedule of rates are released every year and is valid for the financial year. During last 3-4 years, the schedule of rates have not been revised. This schedule of rates is also available on Corporation’s website www.mcgm.gov.in. In the schedule the properties are classified ward wise and further sub-classified on area wise in the ward on the merits of it’s rental values. The rates are given for ground floor without lift, for upper floors slight additions are recommended.

This schedule of rates is also applicable to non residential buildings like shops, offices, factories, banks etc, which can be worked out with the help of multiple factors to arrive at the rateable value.

With the help of this rate, one can work out the rent, rateable value as well as the exact property tax under present system.

It will be more clear with the help of the following example.

1. A flat on 10th floor of about 2010 Sq.Ft. carpet area in the Mount Unique building at Peddar Road, assessed prior to 1965 is presently paying property tax at the rate of 17 paise per Sq.Ft per month, hence it’s monthly tax liability is 2010 X 0.17 = Rs. 341.70 per month only.

2. However, a newly constructed building similar to the Mount Unique building in the same locality, if assessed in the year 2003 will fetch tax at the rate of Rs.5.17 per Sq.Ft per month i.e. it’s tax will be 2010 X 5.17 = Rs.10,391.70 per month.

As such we observe that in a new building municipal tax is 30 times more than the old building and in return gets the same or very similar services.

Now we would like to illustrate one example of a flat in Sujata Building near Malad Railway Station in North Mumbai.

3. Tax as per Rateable value.

1. Area of the flat 1000 Sq.Ft. carpet.
2. Assessed in year 1971.
3. Rate of assessment is 25 Paise per Sq.Ft. per month.
4. Property Tax = 1000 X 0.25 = Rs.250/- per month only.

4. However, a newly constructed building similar to the Sujata building in the same locality if assessed in the year 2003 will fetch tax at the rate of Rs.2.90 per Sq.Ft. per month i.e. it’s tax will be 1000 X 2.90 = Rs.2,900 per month.

From above we observe that a new building here pays municipal tax which is about 12 times more than what an old building pays, for the same or similar services.
In Mumbai there are about 19,000 dilapidated buildings which needs urgent reconstruction but the residents of these buildings are reluctant to get the building reconstructed as the present tax liability is only 9 to 10 paise per Sq.Ft per month, because it was assessed some 50 to 60 years ago, and after reconstruction the same tax liability will increase to 8 to 9 Rupees per Sq.Ft. per month because it will be reassessed as per new building in the year of reconstruction. This situation is a barrier to the very concept of Urban Rejuvenation.

The Honorable Supreme court has directed the state government to bring uniformity in taxation of property tax. For these very reason, the new of capital value system is sought to be introduced.

Tenanted Property

The above example is for the self-occupied properties. However if the same flat is given on rent, the tax will be worked out as under.

5. If the above flat is given on rent say @ Rs.50 per Sq.Ft. per month and tax is to be paid by the tenant. The property tax will be worked out as under :

Monthly Rent 50 X 2010 = Rs.1,00,500/-
Less 10% Standard deduction i.e. Rs.10,050/-
Rateable Value = Rs.90,450/-
Tax at the rate of 83.5% of Rateable Value = Rs.75,525.75 per month.
Therefore total amount payable by tenant will be Rs.1,00,500 + Rs.75,525.75 = Rs.1,76,025.75 per month.

6. However, if the rent is inclusive of property tax then the tax should be worked out as under :

Monthly Rent = 50 X 2010 = Rs.1,00,500/-

Now Total Monthly Rent = Net rent + Property Tax

Let Net Rent = X
Therefore Rateable value = X Minus 10% of X i.e. = 0.9X

As Tax = 83.5% of Rateable value
Therefore Tax = 83.5% of 0.9X i.e. = 0.7515X

Now we know that Net rent plus Property Tax = Total Monthly rent

Therefore 1X + 0.7515X = 1,00,500/-
Therefore X = 57,379.39
Therefore net rent = Rs.57,379.39 and Municipal Tax = Rs.43,120.61 per month.

We can counter check the above calculations as follows :

Rateable Value = Net Rent Rs.57,379.39 Minus 10% = Rs.51,641.45

83.5% tax on Rateable Value (Rs.51,641.45) = Rs.43,120.61

Hence Total amount payable by tenant will be Rs.57,379.39 + Rs.43,120.61 = Rs.1,00,500 only per month.

In the rateable value system, the following rates of taxes are presently applicable.

For Metered Property
For Residential property tax is 83.5% of Rateable value.
For Non-Residential property tax is 112.5% of Rateable value.
For SRA (Residential) property tax is 21.90% of Rateable value.

For Un-Metered Property
For Residential property tax is 187.5% of Rateable value.
For Non-Residential property tax is 320.5% of Rateable value.
For SRA (Residential) property tax is 42.70% of Rateable value.

Over and above a residential property of 125 Sq.Mtr. Carpet area is subject to 20% extra tax under The Maharashtra Tax on Buildings (with larger residential premises) (Re-enacted) Act, 1979.

Once the rateable value system is clear, it will be easy to understand the capital value system, proposed by the Municipal corporation.

Capital Value system.

In the capital value system, in nutshell, the present market value of the property is determined as if it is in the possession of the owner without any encumbrances. To determine the market value corporation has adopted the rates of stamp duty ready reckoner with slight variations. Once the market value is decided, this market value will remain constant for 5 years. On this market value a certain percent, say 0.3% ,will be charged as property tax for one year. This rate of tax will be decided by the corporation every year in it’s annual budget.

In order to work out the capital value system, the corporation has taken the help of the Tata Institute of Social Sciences and Mumbai University along with many other experts in the department. The main features of the system are as under.

1. The market value of any property should be worked out with the help of the residential rates of the Government ready reckoner.

2. Even office, shop and industrial premises and vacant land will be valued at the residential rates of the ward and zones in which it is located.

3. The Ready Reckoner gives the rates of built-up area per Sq.Mtr, however, the same rate will be adopted for the carpet area.

4. There will be weights for construction category

Construction Type Weights
a. Vacant land/land under construction
b. Semi-permanent structures/chawls
c. RCC structures with or without lift and bunglows 0.50
0.60
1.00

5. There will be weights for users category.

User Type Weights
i. Residential and charitable use.
ii. Factory and Industry
iii. Shop and office
iv. Hotels and similar prestigious buildings. 1
2
3
4

6. There will be weights for age category.

Age Weights
A. Building constructed after 1985
B. Building constructed between 1941 to 1985
C. Building constructed prior to 1940 1.00
0.90
0.80

7. There will be upper as well as lower ceiling on increase or decrease of the tax. Accordingly the capital value tax will not increase more then 2 times of the Rateable value tax and it will not decrease more than 50 percent of the tax as per Rateable value system.

This ceiling will be initially for 5 years only and thereafter it will be reviewed. Shri Subash Lala, Secretary, Urban Development department, Government of Maharashtra, clarified that these factors and ceilings are not final and are subject to revision. The final factors will be known only once the Government amends the various Acts in this connection, after considering people’s representations.

In view of the above factors, which are transparent and known to the tax payers, one can work out the tax liability with the following formula.

Capital Value = Market value X Carpet Area X
Weight for type of construction X Weight for age.

Tax = Capital Value X Tax rate X Weights for user category.

Keeping in mind the above factors, now we shall work out property tax on Peddar Road and Malad East Buildings as per Capital Value system.

7. Mount Unique, old building, Peddar Road.

Area of flat is 2010 Sq.Ft. Carpet.
Present market rate is Rs.15,600 per Sq.Ft. (Ready Reckoner 2003)
User Type (Weight) = 1.00 (Residential)
Construction Weight = 1.00 (R.C.C.)
Age Factor = 0.9 (Since constructed during 1941 –1985)
Market value = 2010 X 15,600 X 1 X 0.9 = Rs.2,82,20,400/-
Tax @ 0.3% (Rs.2,82,20,400 X 0.3% X 1) = Rs.84,661/- per year.
Therefore Tax per month = Rs.7,055/-

8. Flat in New Building at Peddar Road

Area of flat is 2010 Sq.Ft. Carpet.
Present market rate is Rs.15,600 per Sq.Ft. (Ready Reckoner 2003)
User Type (Weight) = 1.00 (Residential)
Construction Weight = 1.00 (R.C.C.)
Age Factor = 1.00 (Since constructed in 1993)
Market value = 2010 X 15,600 X 1 X 1 = Rs.3,13,56,000/-
Tax @ 0.3% (Rs.3,13,56,000 X 0.3% X 1) = Rs.94,068/- per year
Therefore Tax per month = Rs.7,839/-

9. Flat in Sujata, old building, Malad East.

Area of flat is 1000 Sq.Ft. Carpet.
Present market rate is Rs.2000 per Sq.Ft. (Ready Reckoner 2003)
User Type (Weight) = 1.00 (Residential)
Construction Weight = 1.00 (R.C.C.)
Age Factor = 0.9 (Since constructed during 1941 –1985)
Market value = 1000 X 2000 X 1 X 0.9 = Rs.18,00,000/-
Tax @ 0.3% (Rs. 18,00,000 X 0.3% X 1) = Rs.5,400/- per year
Therefore Tax per month = Rs.450/-

10. Flat in New building near Sujata, Malad East

Area of flat is 1000 Sq.Ft. Carpet.
Present market rate is Rs.2000 per Sq.Ft. (Ready Reckoner 2003)
User Type (Weight) = 1.00 (Residential)
Construction Weight = 1.00 (R.C.C.)
Age Factor = 1.00 (Since constructed in 1993)
Market value = 1000 X 2000 X 1 X 1 = Rs.20,00,000/-
Tax @ 0.3% (Rs. 20,00,000 X 0.3% X 1) = Rs.6,000/- per year
Therefore Tax per month = Rs.500/-

In capital value system the tax will fluctuate according to the increase or decrease of market value of the property. Whereas in the case of the rateable value system, due to rent control Act, the rent once fixed cannot be increased, hence the rateable value will always remain constant. From the table a comparative study is illustrated to clear the point further.

We are sure by now it must be clear, as how the property tax on capital value system is going to be implemented.

Most of you must be familiar with the Stamp Duty Ready Reckoner and Market Value of Flats in Mumbai, hence now you can work out the property tax of you property on the basis of capital value system and tax as per rateable value system is already known to you. Now you know why people in old buildings in South Mumbai are opposing this system, because their tax liability will definitely increase.

In our opinion when we are adopting ready reckoner for market value, we must also keep in mind the other important valuation factors considered in the ready reckoner to arrive at the market value. We cannot just take one data from the ready reckoner and other of our own, which is irrelevant to the ready reckoner. For example we are valuing the 60 years old building by depreciating it by 20% only whereas as per ready reckoner it’s value will be practically half. In case of self occupied old property or properties of SRA and others, the protection of cap should be restricted to the original owner only. When he sells the flat at market value and a new owner comes in or a new tenant comes in, there is no justification to continue the protection to the new occupant. Hence he should pay the tax at the market value on which he has paid the stamp duty and his tax should be revised when the flat is transferred in his name by the society.

We are sure by now, you are well informed to judge the merits and demerits, if any, of the capital value system.

Comparative Examples of Property Taxes

No. Description of Property Tax as per
Rateable Value
Rs. per month
Tax as per
Capital Value
Rs. per month Actual Tax payable
Rs. per month Remarks.
1. Peddar Road property, old building, self occupied, assessed prior to 1965. 341.70 7,055 683.40

Increase of
Rs.341.70 In case of Increase in tax then capital value tax or 2 times of Rateable value tax which ever is lower is to be considered

2. Peddar Road property, New building, self occupied, assessed in the year 2003. 10,391.70 7,839 7,839

Reduction of
Rs.2552.70 In case of Decrease in tax then capital value tax or 50% of Rateable value tax which ever is higher is to be considered

3. Malad East property, old building, self occupied, assessed in the year 1971. 250 450 450

Increase of
Rs.200 Here increase is less than 2 times of Rateable value tax.

4. Malad East property, New building, self occupied, assessed in the year 2003. 2,900 500 1,450

Reduction of
Rs.1,450 Reduction permissible is maximum upto only 50% of Rateable value tax.
5. Peddar Road, tenanted property, new building, when the rent is excluding tax 75,525.70 7,839 37,762.85

Reduction of
Rs.37,762.85

6. Peddar Road, tenanted property, new building, when the rent is including tax 43,120.61 7,839 21,560.30

Reduction of
Rs. 21,560.30

7. If the Peddar Road property, old building, is given on rent for the first time after the introduction of the capital value system 341.70 7,055 683.40

Increase of
Rs.341.70 Increase is restricted to 2 times of Rateable value tax. Amount of rent will have no bearing on the property tax.

8. If the Peddar Road property, New building, is given on rent for the first time after the introduction of the capital value system Not Applicable 7,839 7,839 Actual tax whether it is self occupied or tenanted and on any amount of rent. Amount of rent will have no bearing on the property tax.

9. If Malad East property, old building, is given on rent for the first time after the introduction of the capital value system 250 450 450

Increase of
Rs.200 Here increase is less than 2 times of Rateable value tax. Amount of rent will have no bearing with the property tax.

10. If Malad East property, New building, is given on rent for the first time after the introduction of the capital value system
Not Applicable. 500 500 Amount of rent will have no bearing with the property tax.

——————————————————————————————–
Santosh Kumar & Sunit Gupta. Tel : 2883 5510, 2883 4442. Email : apci@rediffmail.com

The sources of Revenue for the urban local bodies in Maharashtra are income from taxes collected by the local body, grants from Govt. and other sources of income which include levies, fees etc. Property tax and octroi are the major sources of revenue for the urban local bodies by way of own income. Grants are received from Govt. in lieu of various taxes collected by the Govt. from the area of the local bodies which contribute 40 to 50 percent of the total revenue generated by the local body.
Out of the major revenue earners for the local body namely property tax and octroi, octroi was the most buoyant, reliable and definite source of income for municipal bodies, but the inherent defects, shortcomings and the abuse of the system to a large extent contributed t the Govt’s decision to abolish octroi in May 1999.
Property tax is levied on land or building or both situated within the jurisdiction of Municipal Council/Corporation. The property tax is levied on the basis of rateable value of all the land and buildings situated within the jurisdiction of the civic body. The rateable value is fixed on the basis of annual rent actually received or that can be received deducting from it 10% for repair or any other account. The property tax is collected from the house owner/occupiers/lease holders.
Consolidated property tax includes the following:
(a) a general tax
(b) a general water tax
(c) a lighting tax
(d) a general sanitary tax
(e) a special latrine tax
(f) a fire tax
(g) an environment tax.
Consolidated property tax for various classes of Municipal Council is as mentioned below:
Class of Municipal council Minimum % Maximum %
A 23 28
B 22 27
C 21 26

As per the provisions of Maharashtra Municipal Council Act and rules made there under, Property tax is supposed to be revised every four years, but such a provision is not incorporated in the Municipal Corporation Act. Also there is no timely revision of the number of properties within the jurisdiction of the Municipal Council.
The present system of property tax is on the basis of rental value of the property. It is lacking in many aspects, especially buoyancy, simplicity and equitability. On account of Rent Control Act, the rents of properties in Mumbai are frozen at 1940 level. In the case of properties assessed thereafter, their first letting is considered as standard rent as per the definition of Standard Rent given in the Rent Control Act and same is taken as basis for assessment purposes. This base of tax remains undisturbed unless there is alteration or addition in the properties or its user is changed. This has resulted in lack of buoyancy.
The present system of property taxes is as under:
(1) Tax is calculated on a percentage of rateable value.
(2) Rateable value is derived from the rent which the property fetches. The formula is gross annual rent less 10 %. The balance is the rateable value.
(3) Assessment of tax requires estimation of reasonable rent or fetching capacity.
(4) Rent fetching capacity is estimated as follows.
(a) Rented properties on actual rent earned.
(b) Owner occupied properties-Expected rent by adopting letting rates prescribed for the locality.
(c) Purpose built properties, i.e. Cinema Houses, Race Courses, Studios etc. Income of these entities is taken as a base for deriving rateable value.
The system based on rental basis has certain disadvantages which are as under:
(1) Lack of buoyancy—On account of provisions of Rent Control Act and legal pronouncement.
(2) Lack of transparency –Tax payers are ignorant of the methods of calculation of rateable value which are complex.
(3) Lack of equitability – Old buildings have lower incidence of tax as compared with the new bldgs, in the same area. Besides rents are not periodically updated. The situation gets aggravated over the years.
(4) Arbitrary nature—Only the courts can change the rateable value fixed by the Investigating Officers.
Bombay Municipal Corporation had entrusted the work to Tata Institute of Social Services to study and recommend the system which will do away the drawbacks in the present system in Municipal Corporation of Greater Mumbai. It has accordingly submitted its report recommending capital value based system, the advantages thereof are as under:
(1) Formula based valuation is possible with simplicity.
(2) Self assessment is possible.
(3) Greater flexibility in tax administration which provides better control over revenue.
(4) Discretion of the Assessor is reduced to the minimum.
(5) The basis of taxation is transparent to all.
(6) Reassessment in keeping with market value is possible which gives buoyancy.
The Govt. has received a proposal from the Bombay Municipal Corporation which is under consideration. At the same time, the State Govt. may adopt the said models with certain modification for the remaining Corporations as well.

Identification of Land and Building :
The first entry in the book lays down that all lands and buildings are required to be entered into the book distinguishing each of them from the rest by name or number.
The System that is normally being followed is of giving number to each land or building with land.
The whole city is divided into several wards, say, A,B,C, etc. and property in each Ward is identified b that Ward letter and number, e.g. Property falling in “A” Ward will be identified as A Ward No….. Property falling in “B” Ward will be identified as B Ward No…. and so on.
The main reason of giving each property a distinct number is for is identification. Property taxes are levied on the property and if it is not possible for the local body to effect recovery by taking appropriate action against the property as provided in each of the Urban Local Bodies Acts.
All urban local bodies in India follow the system of numbering the lands and building. As per the provisions contained in these Act, e.g. Section 157(1) of the Bombay Municipal Corporation Act, 1888 provides as under : “the assessment book to be made separately for each Ward and in parts if necessary”.
The main purpose of diving the assessment book Ward-wise and even thereafter in parts in mainly for the purpose of identification of each of them from the rest.
Obligatory duty :
It is important to note that “The naming of streets and numbering of premises” is one of the obligatory duty of the local body, Sec. 61(P) of 1956 provide for naming of street and numbering houses.

Collection of Various details Relating to Lands and Buildings
The moot question that now comes for consideration is where from all this information about land and building can be obtained by the staff of that local body.
All lands situated within the limits of each State have been surveyed and given different number per holding called Survey Number – Elaborate site plans called survey sheets have been prepared, printed and made available to each of the office of the Collector of that District village-wise. These sheets are periodically updated by the Government showing therein the new developments that have taken place. Apart from the areas of lands the survey register also contains the information about the ownership of the lands and buildings. Every local body not only copy this information into a special register called land register by should purchase the entire set of such survey sheets from the concerned office of the Government.
The local body should also updated these sheets periodically. This work of updating should be entrusted to the staff who will visit the concerned office of the State Government and trace out the changes made in survey sheets of the Government on the Survey sheets maintained by them.

By S.B.Rathore., Advocate High Court

Every property owner has normally right to enjoy this property to the exclusion of others. If we need and accommodation in anybody’s house we have usually to pay the owner in return some consideration which we call “rent”)
This rental value would however very with Probable benefit that would accrue to occupier. Greater the benefit higher would be the rent paid. No occupier would agree to pay rent for a property from which no benefit could be derived by him,. Therefore, what the property owner receives is according to the value beneficial occupation. This value of occupation of a property would serve as a good measure of the value of a property for the purpose of rating.
However the concept of actual rent or contractual rents in the circumstances stated above is not in all cases a reliable test or guide for arriving at the assessment of a property and it would come in conflict with one of the important principles of the fair ratings namely uniformity of
Assessment.
While fixing the rateable value the figure obtained by deducting this amount (10 p.c. of gross value from the gross value of a property fives us the Rateable value on which rates and taxes are calculated at a certain percentage.
Section 154 (1) of the Bombay Municipal Corporation Act 1888 does not say about the “gross value” but mentions about “Rateable Value”.
The statement of a property for the purpose of rating depends upon the rent fetching capacity of hereditments, However rent of a property depends largely on the common economic law of demand and supply and hence the fair and reasonable rent is also called market between the landlords and tenants.. There are several other factors such as amenities offered by a property or its site, situation and location have influence on the rent. It is joint operation of all these rent influencing factors which is rounded up in the expression of “higgling of the makers” while arriving at the figure , awe need not restrict ourselves to the actual landlords letting out the property or to the actual tenant seeking to take up the property or premises therein. We must consider all probable and possible tenants who would occupy the property as it stands and for he purpose of which it is intended to be occupied. In other words we have to find the rent which a hypothetical or imaginary tenants would pay to a hypothetical or imaginary landlord for the property in its present state and condition. The figure so arrived at is “Hypothetical Rent” in the gross value of the property provided other conditions laid down in the definitions are fulfilled.

Concept of Standard rent and rateable value
The basis for determining the Annual Value is not the actual rent paid by the Tenant but the value that may have to be determined is the value which the owner may be expected reasonably to get as rent in respect of his premises which are 1st or expected to 1st. In considering what rent may reasonably be expected for certain, premises, the operation of Rent Restriction Law in the locality or where the fair rent has been fixed under the Rent Act, such fair Rent is factor which cannot be ignored altogether. In corporation of Calcutta V/s. Life Insurance Corporation of India (AIR 1970 SC/417) it was decided that it was not the rent received by a Tenant from the sub-tenant but the rent realisable y the owner namely the standard rent was the criteria of assessment. in case of Guntur Municipal Council it was held that “As there is no distinction between the buildings fair rent of which has actually bee fixed by the rent controller and then in respect of which no such rent has been fixed Municipality will have to arrive at their own figure of fair rent in accordance with the principles laid down in Rent Control Act.

Principle of Reasonable rent
Can the License Fee or the Compensation be equated with the amount of Hypothetical Rent for fixing the rateable value ? Answer is no. The Cardinal and marked distinction between Lease and Licence is that in a lease or letting, there is a transfer of interest in land, whereas in cases of Licence there is no transfer of interest. A lease creates an interest in the property and the lessee may transfer that interest in the property to another person because \he holds exclusive possession of the property. With the Licensee it is not so, he holds only personal rights which are not transferable. A licensees merely enjoys the right to use the property without its exclusive possession and thus right being personal it is neither transferable nor heritable. The crucial test in each case is whether the instrument is intended to create or not to create an interest in the property which is the subject matter of an Agreement. Khalik V/s. Tufal Hussain (Air 1988) Supreme Court 184/190. The Bombay High Court in (1972) B.L.R. Supreme Court page 144 held that the test of exclusive possession is an important test whether a transaction is lease or licence. since there is marked distinction between a losses and a Licence, the question arises whether amount of compensation of Licence fee paid by a lease can be the criteria for assessment. In the Mahad Municipality V/s. Divisional Controller, Bombay statue Road Transport Corporation 163 Bombay Law Reporter 174 and Padma Devi’s case (Air Sc151) it was held that rateable value should be fixed on the basis of the Hypothetical rent which is most reasonable taking into consideration the fact of the value of the property to an owner and not to an occupier. The hypothetical rent which is most reasonable taking into consideration the fact of the value of the property to an owner and not to an occupier, The hypothetical rent in view of the Rent restrictions could not be higher than the standards rent and the amount of compensation or licence fees cannot form the basis for the fixation of rateable value under section 154 if the Bombay Municipal Corporation act, 1888. However, with the passage of time the solder theory of Hypothetical rent exploded and became obsolete giving rise to the theory or standard rent by reason of the statutory restricted placed on the freedom of every property owner in the matter of meaning and extracting rent as he wishes. The Supreme Court in Dewan Daulat Rai Kapoor V/s. Delhi Municipal Committees (AIR 1989 SC 541) observed that – “Even if the standards rent has not been fixed by the Controller the Assessing Authority would in either case have to arrive at its own figure of the Standards Rent Act by applying principles laid down in the Delhi Rent Control Act, 1958 and fix the annual value on the basis of such figure of standard rent.”
A Society under the Co-operative Societies Act is the virtual owner of the property and its members are mere Tenant – members holding interest in flats allotted to them under share certificate and there is nothing in the cooperative Societies Act to indicate that there is relationship of landlord and the tenant in respect of flats allotted to its members. In fact they are mere licensees holding shares or right of membership in flats which are liable to be attached or soled in execution of decree against them as held in R.N. Shah V./s., H.J. Joshi (AIR 1975) Supreme Court – 1470. Even the Compensation paid by a subsequent or Licensees to a tenant member of the flat cannot be equated with the amount of Hypothetical rent for fixation of the rateable value of the Co-operative Society’s building. Soc BMC V/s. Jeevan Jyot Premises Cooperative Society in First Appeal No. 393/75 of High Court of Bombay, In Sohanlal Naraindas V/s. Laxmidas (68 Bombay Law Reporter 400) it was held that what is assessable is reasonable rent and the compensation recoverable from the Licencsees cannot be mistake for such reasonable or hypothetical rent.
Since the Rent act does not recognises the contractual rent as an ad-interest standards Rent and puts prohibition to claim, or receive any rent in excess of standard rent even though standards rent has not bee. fixed by any competent court such standard rent has to be the base for the purpose of computation of rateable value of a property. in case of non fixation of Standards Rent statutorily. The assessing authority has to arrived at its own figure of standards rent on the basis of the modalities laid down in the act or guide lines given by the Courts in various judgements delivered from time to time. (case of Padmadevi AIR 1962 SCI 51 Case of LICE AIR 11970 Sc 1417 Case of Cuntur Air 1971 Sc 353 Case of Ratna Prabha Air 1977 Sc 308 and case of Dr. Bal Bir Singh and JT-1995 (6) S 245 Bhagwat Ri V. State of Punjabi.
However inspite of various judgement delivered by the apex Court of Indian relating to the mode and method of fixing rateable value, the assessment Authorities .are not honoring ratios in good faith and in proper prospective but property owners are driven to the Appellate Courts for their relieves and they are forced to deposit despite amount of Municipal taxes as a condition precedent and have to go on depository the same at 80 p.c. in the light of Ordinance No. ;____ of 19998 declared by the Government of Maharashtra lately.
Remedies available Tax payers in such circumstances, are be vehemently challenge the Tabulated ward report for revision of ratable value due process of law as appellate stage and to file correct state rent of actual rent being recovered from the tenants excluding. service charged for amenities rendered to them as laid down in Section 155 of B.M.C. Act.
Secondly in case of revision or increase in existing rateable value it is the right of every property owner to insist upon the detailed particulars and grounds on which such increase is proposed by efficiently ceiling for copies of Tabulised must respect from assessing Authority.
Thirdly on receipt of special Notices for such revision or increase in rateable value of property written objection should be made within the stipulated period and should call for personal hearing in the matter. At the time of hearing before Enquiry Officer investigating complaint it is the right of tax payers to call for the documentary evidence on which proposed revision is sought for by Assessing Authority to enable Tax Payers to put up and affective defense thereto by way of written submission. On receipt of final order fixing the ratable value there is an appeal under Section 217 of B.M.C. Act and thereafter further appeal to High Court under section 217 of B.M.C. Act.
Every property owner including Tenant Member of Co-operative society is further entitled to lodge a general complicant against the Rateable Value for next coming year in pursuance of publication of Notice in local newspapers and the same can be lodged during 20th November and 14th December every year, as provided under Section ____________ of B.M.C. Act.
At the subject matter of fixing rateable Value involves scientific knowledge of valuation of a property it should be meticulously handled by production of Valuation Report from an experienced Architect -cum-Valuer and with the help of expert counsel who can shatter the evidence of assessing authorities by cross examination of their witness proposing the revision in rateable value. So you may hitch your wagon to the Star with the best of your ability by leaving it to your luck and sincere labour of your lawyer.

REPAIR PERMISSIONS (M.C.G.M. Jurisdiction)

BY: SUDHAKAR DOKHANE
(Past President PEATA (I)

In earlier two chapters, the information on i) Why Building deteriorates and become weak and ii) Maintenance of Structures with Do’s & Dont’s, is provided. It is also necessary to know regarding the nature of Repairs and its permissions required from the local civic authority thereof. One should understand that timely repairs only, can keep buildings in healthy conditions. It is seen that largely the repairs are ignored and delayed for this or that reason, or some time due to abnormal delay in granting permissions by the local municipal authority.

However such permissions are based on the nature of repairs. It is also noticed that, some time people are carrying out the work of additions or alterations under the disguise of repairs and ultimately land in to troubles. Repairs amounting to structural changes or additions or alterations requires regular permissions with scrutiny and procedures, which are inevitable and are always in the interest of the applicant.

Very few people know that certain type of repairs do not require permissions from the Corporation. The nature of repairs and its permissions are described below. The Municipal Corporation of Gr. Mumbai has prepared following guide lines for the information of public. The repairs are classified in three categories:-

i) Repairs where permission is NOT required from M.C.G.M.
ii) Repairs prohibited.
Repairs which REQUIRE permissions from M.C.G.M

REPAIRS NOT REQUIRING PERMISSION FROM M.C.G.M.
Following repairs do not require permission from M.C.G.M.:-
Providing guniting to structural members or walls.
Plastering, pointing, and Painting.
Changing of floor tiles.
Repairing of W.C., Bath, Toilets and Washing places.
Repairing or replacing of drainage pipe joints, taps, manholes and other sanitary fittings.
Repairing or replacing of sanitary/water, plumbing, and electrical service lines.
Repairing and or replacement of roof with same material.

REPAIRS PROHIBITED

Certain repairs are prohibited which are detrimental to the structural
stability of the building. So, never attempt following, unless same is permitted by
the authority.
Lowering of plinth.
Removal of load bearing walls.
Constructions of Lofts / Mezzanine floors supported on partition walls which are not load bearing walls.

REPAIRS WHICH REQUIRE PERMISSION FROM M.C.G.M.

Repairs involving the removal, alteration or re-erection of any part of the building covered under section 342 of M M C Act, permission from M.C.G.M. is required to be taken, such as for: -

Changes in horizontal and vertical existing dimensions of the structure, and thereby increase in area.
Replacement of any structural R.C.C. member such as colums, beams etc and load bearing walls.
Construction / extension of mezzanine floor / loft.
Flattening of roof in R.C.C. or repairing and replacing of roof with different materials.
Enclosure of balcony.

4) PEOCEDURE FOR OBTAINING PERMISSIONS.

Wherever the permissions are required from M.C.G.M. as listed in item
(3) above, the applicant has to apply to the appropriate civic authority
of the Corporation along with the documents as stated hereunder:-

Owner / Occupier shall: -

Appoint a registered Structural Engineer, and Architect under whose supervision the work will be carried out.
Submit the application for permission to the concerned officer in format through the registered structural engineer, architect so appointed.
Submit the following documents along with the application:-

Supervision memo from the structural engineer, & architect.
N.O.C. from the Society / Owner, for proposed work.
Copy of the last property tax assessment bill paid.
Copy of the licence, factory permit etc., in case of industrial premises.
Plan showing the details of proposed repairs, additions or alterations.
f. Certificate from the structural engineer to the effect that proposed work does not affect the structural stability of the building.

Note:- On completion of the work the applicant has to submit the completion certificate from the structural engineer and architect appointed.

5. TIME LIMIT FOR GRANTING PERMISSIONS
If application is submitted with all required documents and the same is in order, the concern officer of the Corporation has to issue such permissions within 30 days, which is a mandatory time limit.

Please note that such permission does not empower you to carry out the work in an unauthorised premises / portions, nor does it construe authorisation of the premises in which such work is to be carried out.

6. WHOM TO APPROACH FOR PERMISSIONS

Nature Of Work Officer authorised to grant permission
i) Construction of mezzanine floor

ii) Replacement of structural members

iii) Change in horizontal and vertical existing dimensions, resulting increase in area.
iv) Flattening of roof in R.C.C. or
repairing & replacing roof in
different materials
i) Construction of lofts.

ii) Enclosure of Balcony & its
merger in the adjoing room.
iii) Interior decoration works
involving changes, without
replacement of any structural
member.

DONT’S:

As a precautionary measures, remember again, following Dont’s:-
a) Do not carry out any unauthorised additions there by over loading
existing structure for which it is not designed.

Do not make any internal changes / alterations, specifically change in positions
of toilet blocks or kitchens. The same should be maintained in alignment with other floors.

Do not try extensions of wet areas over dry areas.

Do not tolerate any leakages, attend immediately

Do not carry out additions and alterations if the same are not approved from the municipal authority, architect & structural engineer.

Do not carry out such works without advice and supervision of qualified & experienced architect, structural engineer and contractor.

Do not carry out any work of repairs or additions & alterations by petty contractors.

Do not carry out following works unless backed by professional engineering support as described in item (f) above:-

i) Replacement of floor finish.
ii) Repairs of internal, external plastering, and R.C.C. members.
iii) Any modifications to existing plan, according to which the building exits.
iv) Toilet or Kitchen renovations.
v) Structural alterations required for interior designing & decoration.
vi) Any R.C.C. repairs which involves use of steel, cement, sand & stone/metal.

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ASSESSMENT OF PROPERTY & TAXES
(Guide Lines of Municipal Corporation of Gr. Mumbai)

BY: SUDHAKAR DOKHANE
(Past President PEATA (I)

Assessment Tax is a revenue earned by Civic authority for the services being rendered to public viz. water, sewerage, education, streets etc., which is based on Ratable Value decided by the assessment department. The department publishes periodically the tables of ratable value for different localities, which remain in force till the date taxes are amended. Following preliminary information will give fair idea as to how the taxes are worked out and recovered.

Which properties / premises attract assessment taxes ?

All the private properties, (lands or lands with buildings there on) either free hold
or lease hold, attract assessment taxes. The vacant lands or lands under construction are assessable. After the construction is completed the premises are assessed together with land component, from the date of occupation permission granted.

Which properties / premises do not attract assessment taxes ?

Following properties / premises are exempted from assessment taxes: -
The lands or land with buildings owned, occupied / used by the State or the Central Govt.
Lands/Premises owned by Civic authority. (Municipal Corporation)
Lands reserved for non-buildable public reservations in the development plan i.e. play grounds, gardens, roads etc.
The lands / premises owned and used by public charitable trusts viz. temples, hospitals, schools etc. are partially exempted from the assessment taxes.

How the taxes are worked out ?
The taxes are worked out on the basis of Ratable Value of the properties/premises
determined by the assessment department.

What is ratable value ?
The value of property reduced by statutory deduction is Ratable Value (R.V.).
The statutory deduction is 10%. : – The ratable value (R.V) is based on fair and reasonable Annual Rent of the property / premises presumably it would earned, deducting 10% statutory deduction.
For example: -
i) If yearly Rent is : Rs.1000/-
Less: ii) 10% statutory deduction : Rs. 100/-
_________________________________________________________________________
Ratable value is : Rs. 900/-

Whether the Ratable Value can be challenged ?
Yes. It is experienced that the ratable value determined by the department in
initial stage (when the first notice is served to assessee) is always on higher side unless challenged.

Under section 167 of BMC Act 1888, the assessee has to lodge objection for the
ratable value, within 15 days in writing with the department, otherwise ratable value so decided is treated as final.

It is advisable that the assessee should lodge objection in time. In spite of
objections, if R.V. is not changed the assessee can appeal to the appropriate civic authority failing which he can challenge the same in the court of law.

What is the percentage of taxes in relation to ratable value ?
Generally the taxes are 75% to 80% of the ratable value for residential premises.
For commercial premises it is double and one half times for industrial premises.

How the taxes are recovered ?
The taxes are recovered in two half-yearly equal installments viz.: -
April to September (1st installment).
October to March/every year (2nd installment)

What actions Civic authority can initiate for non payment of taxes ?
The Civic authority under the provisions of BMC Act with due process can
recover the taxes by: -
i) Charging the Penalty with interest
ii) Attaching and or auctioning the properties / premises

Note: a) Non payment of taxes is an offence and assessee is liable for prosecution.
The landlord is always liable for payment of taxes.

Whether any rebate / refund is permissible for vacant premises ?
For vacant premises land lord can claim refund in general taxes only, for vacancy
period subject to: -

The vacancy is intimated to the department in time i.e. on or before 15th of April & October of every year.
The vacancy is verified by the department, & the tax bills are paid upto date.

Subject to above compliances the department can refund 2/3 amount of general
taxes to the assessee. If the notice of vacancy is not given in time the refund can be refused.

What are the contents of tax bill ?
Tax bill consists of following: -

Name & address of Assessment authority & Assessee.
Description of property.
Ward number under which property is assessed.
Period of taxation, type of premises: Residential / Non-residential.
Year from which the property is assessed.
Bill and last date within which the payment is to be remitted.
Retable value, Payment payable.

Different heads of taxes: -
Description Percentage of taxes related to ratable value
(w.e.f. 1.4.2000)
i) General tax : 30%
ii) Water tax : Not included if there is authorised
connection to premises.
iii) Drainage tax : As above
iii-A) Repair cess tax : By separate bill if property is cessed.
iv) Water benefit tax : 12.50%
v) Sewerage benefit tax : 7.50%
vi) Education cess tax : 12.00%
vii) Tree tax : 5.00%
viii) Street tax : 15.00%

Notes:
The Municipal Corporation can charge additional taxes for larger residential premises under “Larger Premises Tax,” in case the carpet area of flat is 125 Sq. Mtrs. or above.

The above text is based on the information collected, on present working of the assessment department of Municipal Corporation of Gr. Mumbai. The entire process is very much complicated and involves lot of technical compliance from time to time. It is advisable to consult the expert in the filed for proper assessment & benefits thereof.

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