Government approved a property tax waiver on houses up to 500 sq ft
The Maharashtra cabinet has approved a property tax waiver for houses in Mumbai with carpet area upto Rs 500 sqft. The waiver will be applicable from January 1, 2019. The proposal was Shiv Sena’s election promise before the 2017 civic elections. The Brihanmumbai Municipal Corporation (BMC) had cleared the proposal for the waiver in July 2017 and it was sent to the state government for clearance. However the state government did not take up the proposal till Friday, which was the last cabinet meeting before the election code of conduct for the general elections comes into effect.
The BMC’s proposal also included relief in property tax up to 60% for flats that are more than 500 sq ft area up to 700 sq ft area, which the state government did not need to clear as the powers are with the BMC and it does not need approval from the government. To woo the urban middle class ahead of the Lok Sabha polls, the state government took a step forward. Ms. Manju Yagnik, Vice Chairperson, Nahar Group & Vice President NAREDCO (Maharashtra) said, “This move is for the larger interest of the citizens specially in the middle class category as close to about 15 lakh houses belong in the 500 sq. ft range, which will be completely relieved of property tax. On the other hand, close to 2 lakh houses will be eligible for 60 per cent reduction in overall tax rate which come under the 500 to 700 sq.ft category. It is a consumer centric move which will also give a boost to affordable housing.”
Mr Arvind Nanadan , Executive Director of Research at Knight Frank India stated, ” The decision is a good move which can boost property buying decisions. The outflows for houses with smaller configuration such as 1 bhk, 1.5 bhk or in some cases even 2 bhk will come down. This will also help existing owners keep their expenses towards the housing in check. In Mumbai, property prices are high, leading to higher EMI on bank loans than other locations of India. This decision will ease the burden of monthly outflow for homeowners. The biggest challenge for the developers in the last few years has been to bring the real demand back to the market. This decision would also support Government’s initiative to provide ‘Housing for All by 2022’.” Whereas Mr.Amit Wadhwani, Co-founder, Sai Estate Consultants Chembur Pvt Ltd reflects, “With 64% of units falling under the category, the waiver of property tax for houses under 500 sqft is a positive move by the city authorities to reduce burden of house ownership. Government’s decision to solve the persistent challenge of housing will further promote affordable housing with increased accessibility. After the change of property tax from rateable value to capital value system in 2010, this is a progressive move with nominal effect on BMC but might have implication on infrastructure and overall development commitments. However this will drive a wave of confidence in the market and is likely to be highly fruitful for the 17 lakh tenants and owners of the mid segment and affordable property”
The waiver will be applicable from January 1, 2019.