Other Than Per-Sq-Ft Rates, Home Buyers Already Have To Budget For Never-Ending Expenses
Prafulla Marpakwar | TNN
The proposed 0.5% cess on property tax could well be the last straw for home owners in the city.
While buying a flat, one has to pay stamp duty, registration fee, VAT, service charge and service tax; and once a flat is purchased, the owner has to pay at least seven types of taxes. “We have to pay general tax, street tax, tree cess, education cess, employment guarantee cess… I have two flats, so I have to pay wealth tax on the second flat. In return, what do I get? Roads full of potholes, erratic water supply and poor civic services,” said Sunil Shinde, who is in the process of buying a 1,300-square-foot flat for Rs 2 crore.
The cess has been proposed to fund the establishment of the Maharashtra Municipal Property Tax Board (MMPTB). “Chief minister Prithviraj Chavan will have to take a decision since the proposal will come into force after the urban development department, headed by the CM, issues a notification for the purpose,” a senior bureaucrat told TOI on Friday.
The CM, though, has come in for criticism from not just property owners and activists, but even politicans. Senior Congress leader Anant Gadgil has requested Chavan to reconsider the proposal in the interest of the common man. “The aam aadmi is already burdened by spiralling prices. A middle-class Mumbaikar pays a huge amount to the BMC by way of several taxes. The new cess will only add to the burden.” An architect, Gadgil said that instead of imposing fresh taxes, the civic organization should launch a tax-recovery drive, improve resource mobilization and tap such resources, which will not have an adverse impact on the common man. “In a city like Mumbai, the BMC has a scope to mobilize resources,” Gadgil said.
Social activist Prakash Gangadhare said that Chavan should “immediately stay” the proposal for the cause of the common man. “We will meet Chavan to press for our demand. At a juncture when the life of the common man has become miserable, additional cess on property tax will create a fresh financial crisis for him.”
Another flat buyer, Milind Sharma, too strongly criticized the urban development department’s proposal. “On one hand, Chavan has been holding forth on low-cost and affordable housing and, on the other hand, by imposing fresh taxes, the basic purpose of constructing low-cost houses would be defeated,” he said. The state-run Maharashtra Housing and Area Development Authority (Mhada), he said, charges a fee if a flat faces the road or has a better view. “I have been told that Mhada has been levying additional fees for flats overlooking an arterial road or a highway,” said Sharma.
After the finance commission declined to release Rs 1,100 crore to the state government due to its failure to set up the MMPTB, a bill for the board was passed during the state legislature’s budget session. It was later approved by governor K Sankaranarayanan. The bill provides for imposing a cess of 0.5% on the property tax’s general component to meet the board’s expenditure.
FLAT OUT DUTY, FEE, CHARGE, TAXES & NOW A NEW CESS?
New buyers
They must pay the state government:
Stamp duty | 5% of the agreement value or as per the ready reckoner rate, whichever is higher
Registration fee | 1%, up to a maximum of 30,000
VAT | 1% of the agreement value or as per the ready reckoner rate, whichever is higher
Service tax | 2.57% for under-construction flats, on the agreement value or as per the ready reckoner rate, whichever is higher
Service charge | 20 per page (of the documents submitted to the registration office) Wealth tax | If a person owns two flats, he has to pay wealth tax on the second flat if its value exceeds 15 lakh Proposed | 0.5% special cess on the general component of property tax
(Commercial properties must pay twice the water tax, water benefit tax, sewerage and sewerage benefit taxes) Times View
Property prices in Mumbai are among the highest in the world and to burden the home buyer with a slew of taxes, first during the purchase and then as long as he owns that property, is a huge additional deterrent. The idea of a fresh cess on property tax is ill-conceived and suggests that the government is taking the tax payer for granted. It would do better to first turn off the corruption tax, which funnels money away from the public exchequer, instead of picking the citizen’s pocket. V O I C E S O F D I S S E N T
“Today a flat buyer has to pay service tax, VAT and infrastructure tax, in addition to the stamp duty, registration and brokerage charges. While the proposed cess will address the government’s funding requirement, it will increase the burden on home buyers who will not get anything in return. In an environment where interest rates are rising, this will be one more factor that will discourage buyers
— Rohit Shetty | LAWYER “Last year, when we bought our flat, we paid 1% VAT, which we found daunting. Now, for someone who is already reeling under the impact of huge EMIs in relation to the take-home income, and the increasing home loan rates, this additional cess would come as yet another blow. Our domestic budget may suffer — Gopal Krishnan | SENIOR MANAGER, ONLINE MARKETING FIRM
“On one hand, (chief minister Prithviraj) Chavan has been deliberating on low-cost and affordable houses and, on the other hand, by imposing fresh taxes, the basic purpose of constructing low-cost houses would be defeated. In larger public interest, the chief minister should step in and reconsider the proposal or else we will be left with no option but to move court
— Milind Sharma | BUSINESSMAN
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