The Brihanmumbai Municipal Corporation (BMC) is in a legal tangle over retrospective tax assessments. This has caused a delay in property tax billing for the fiscal year 2023-2024.
To avoid future gaps, the civic organisation plans to send interim bills to taxpayers starting next month. These bills will include a 10% increase as per a five-year regulation.
The problem comes from BMC's implementation of the capital value method to assess property taxes. This system, implemented retroactively in 2010, has been a point of controversy.
In 2019, the Bombay High Court (HC) invalidated some retroactive tax regulations. The Supreme Court dismissed BMC's appeal against this ruling. The Supreme Court directed BMC to formulate new regulations and issue fresh bills to taxpayers.
The civic body may have to refund taxpayers who paid property taxes based on the capital value method between 2010 and 2012. This could amount to thousands of crores of rupees. In addition to issuing refunds or adjusting excess amounts collected from citizens, BMC must reassess the capital values of all properties.
Given its inability to refund such a large sum, BMC has asked the state government to amend the BMC Act. Due to these unresolved issues, BMC has not issued property tax bills for the period from April 1 to September 30.
Despite not sending bills for the current fiscal year, BMC has already collected INR 496 crore in arrears from last year. To avoid further delays, it plans to issue interim bills based on ready reckoner rates.
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