The Brihanmumbai Municipal Corporation (BMC) is considering a property tax hike of 12.5-13% as part of its planned five-year revision. This would be the first property tax increase since 2015-16, following a significant delay caused by the pandemic, political upheavals, and elections in recent years. The proposed hike comes as the civic body celebrates its highest-ever property tax collection of Rs 6,198.05 crore for the fiscal year 2024-25, just short of its target of Rs 6,200 crore.
Impact of the Proposed Tax Revision
Property tax in Mumbai is one of the most important sources of revenue for the BMC, and the city’s growing infrastructure needs make periodic revisions a necessity. The last planned revision in 2020 was delayed due to the pandemic and political disruptions, including state elections in 2022 and the upcoming Lok Sabha and assembly elections in 2024. However, with the completion of a five-year cycle approaching in 2025, the BMC is now preparing to move forward with the tax adjustment.
The proposed 12.5-13% hike is expected to be discussed in an upcoming meeting before being submitted to the state government for final approval. There is also the possibility that the revised property taxes could be linked to the newly updated ready reckoner rates, a decision which will be finalized at a later stage. Recently, the Maharashtra government increased the ready reckoner rates by 3.39% in Mumbai, which could further impact property values and taxes.
Record Property Tax Collection in FY 2024-25
As a sign of increasing property values and improved compliance, BMC recorded its highest-ever property tax collection for the fiscal year 2024-25. Despite falling just short of its target, the Rs 6,198.05 crore collected marks a significant increase from previous years. Additionally, Rs 178.39 crore was collected, indicating strong enforcement efforts against tax defaulters.
The record collection underscores the BMC’s ongoing efforts to enhance tax compliance and streamline the payment process. Several initiatives, including awareness campaigns and better accessibility for tax payments, have been credited for the improved performance. The BMC’s successful collection drive in FY 2024-25 highlights the civic body's ability to generate substantial revenue, even in challenging times.
Top Performing Wards in Property Tax Collection
The city’s performance in property tax collection varied across different wards, with several areas contributing significantly to the overall revenue. G-South ward (Worli) led the way with Rs 624.50 crore in property tax collection, followed closely by K-East (Andheri East) with Rs 568.56 crore and H-East (Bandra East) with Rs 526.64 crore. K-West (Andheri West) also contributed Rs 505 crore to the total.
In total, the Island city generated Rs 1,933.26 crore in property tax, with the D ward (Rs 273.46 crore) and G-South (Worli) being the top contributors. Meanwhile, the western suburbs contributed Rs 3,038.49 crore, with K-East, K-West, and H-East accounting for the highest collections in the region. The eastern suburbs raised Rs 1,218.79 crore, with significant contributions from the S (Rs 330.80 crore) and L (Rs 260.62 crore) wards.
Efforts to Boost Property Tax Compliance
The BMC’s success in achieving its record property tax collection can be attributed to its comprehensive efforts to improve compliance. Several measures, such as digital payment options, mobile apps, and public outreach campaigns, have made it easier for residents and businesses to pay their taxes on time. The BMC’s effective communication, including reminders via SMS and social media, as well as targeted campaigns in high-value areas, have helped reduce the number of defaulters.
Additionally, the BMC has implemented a more efficient system for processing tax payments and resolving disputes, which has contributed to the increase in revenue. These efforts are expected to continue as the civic body aims to maintain a high level of compliance in future years.
What This Means for Mumbai’s Property Market and Residents
For residents and property owners in Mumbai, the potential property tax hike represents an added financial burden, but it is also indicative of the city’s ongoing efforts to maintain and improve infrastructure. As property values continue to rise and new developments emerge, the BMC’s tax revenue will play a critical role in supporting the city’s growing infrastructure needs.
The revision of property taxes, if approved, will likely have a ripple effect on the local property market, potentially influencing property values and rental rates in the short to medium term. However, given Mumbai’s robust real estate market, the hike in taxes may not significantly dampen demand, especially in high-value areas where property prices have seen steady growth.