Mumbai, also known as the finance capital of India, is known to be an expensive city to live in. This is due to the astronomical rent and property prices in the city. If you’re interested in buying a home or already have a home in the city, then you must also pay property tax to the Maharashtra state government.
But is the property tax in Mumbai as high as the price of the property? Let’s find out. This article will also help you calculate the property tax you need to pay in the city.
Municipal Corporation Of Greater Mumbai
Also known as the Brihanmumbai Municipal Corporation (BMC), the Municipal Corporation of Greater Mumbai is the richest city civic body in India. With the annual budget for the Municipal Corporation of Greater Mumbai exceeds that of some of India's smaller states. It is also known as one of the richest civic bodies on the continent of Asia.
Formed in 1888 under the Municipal Corporation Act, the Municipal Corporation of Greater Mumbai is headed by an IAS Officer that’s appointed as the Municipal Commissioner.
The good news that was given to those living in Mumbai was the waiver of property taxes for residential properties less than 500 sq. ft. The decision was approved by the Maharashtra Cabinet in January 2022. This will lead to a loss of INR 462 Crores of which the Municipal Corporation of Greater Mumbai will bear INR 417Crore and the rest, INR 45 Crore, will lie on the state government.
Also Read: Stamp Duty Top Cities India
Calculation Of Property Tax In Mumbai: Online
Property tax in Mumbai is calculated on the basis of the market value of the property. The BMC uses the Capital Value System model for the purpose of calculating property tax. To calculate the property tax owed on a property in Mumbai, follow these simple steps:
Step 1: To start, you will need to calculate the Capital value of your property. To calculate the capital value, you will need the following values:
The market value of your property: This can be found by using the Ready Reckoner set by the state government.
Total carpet area: This is the total area of your property where a carpet can be laid down in. This information is readily available in the sale documents of your property.
Weight for construction type: The following are the weights per construction type for Mumbai:
- Bungalows and Reinforced Concrete Construction- 1 unit
- Under-Construction property or vacant plots- 0.50 units
- Construction other than Reinforced Concrete Construction- 0.60 units
Weight for the age of the building: The following is the weight for the age of the building in Mumbai:
- Constructed before 1945- 0.80 units
- Constructed between 1945-1985- 0.90 units
- Constructed after 1985- 1 unit
You can now use the following formula to calculate the capital value of your property.
The market value of the property x Total carpet area x Weight for construction type x Weight for the age of the building
Step 2: To calculate your property tax, once you have the capital value of your property, you will need the following information:
The capital value of the property: The one we calculated in the previous step.
The current property tax rate in percentage: Varies from 0.316 to 2.296 % depending on the usage of the property.
Weight for user category: Use the following units to find the Weight for the user category in Mumbai:
- Commercial properties- 3 units
- Hotels and similar businesses- 4 units
- Industries and factories- 2 units
- Residential and charitable institutes- 1 unit
Now you can simply use the following formula to calculate the property tax you owe on your Mumbai property.
The capital value of property x The current property tax rate in percentage x Weight for user category
Also Read: Pay Property Tax Chennai
Payment Of Property Tax In Mumbai: Online and Offline
Any individual that owns a property in Mumbai can pay the property tax on the same either online or offline. To pay the property tax offline you can visit a Municipal Corporation of Greater Mumbai (MCGM) help centre (also known as the Brihanmumbai Municipal Corporation (BMC) help centre), the Office of the Assistant Revenue Officer, or the Citizens' Assistance Center in any of the ward offices.
To pay your MCGM property tax online, you can follow these simple steps:
Step 1: Log on to the MCGM’s online portal for property tax by using your account number.
Step 2: This portal will contain your previous property tax bills, outstanding amounts and a payment option for your current property tax.
Step 3: You can then proceed to make the payment for any outstanding property tax you have, you will be led to a payment gateway.
Step 4: Check the portal for the latest update that shows you have paid your property tax and check for any errors that might need to be rectified. In case you see errors, put in an application for rectification straight away.
Make sure to save your receipts of payment as they can be used as valid legal proof of ownership of property in cases of disputes.
Due Date And Penalty On Non-Payment Of Property Tax In Mumbai
The due date for the payment of the property tax in Mumbai is set to 30th June of every year. Any property owner in Mumbai that fails to make the payment of their property tax on or before 30th June will be subjected to a 2% for every month on the outstanding amount of tax.
Exemptions And Concessions On Mumbai Property Tax
The first and foremost thing to note is that your property tax is valid to claim as a deduction on income generated from the property while filing your Income Tax Returns.
The following concessions are provided to taxpayers by the Municipal Corporation of Greater Mumbai:
1. Property used exclusively by charitable and religious institutions is exempt from property tax.
2. Any residential property under 500 sq. ft. of the area is exempt from property tax.
3. Residential property with an area between 500-700 sq. ft. is granted a 60% concession in property tax.
4. Foreign Missions, also known as diplomatic missions, are foreign embassies, high commissions, representative offices, and other delegations offices. However, honorary consulates are not considered a part of foreign missions. Any foreign missions or consular missions are also exempt from property tax.
Now that you know how to calculate and pay your property tax, make sure you do not leave any taxes outstanding. Make your property tax payments before 30th June every year to avoid penalties.