Mumbai: The Brihanmumbai Municipal Corporation (BMC)’s assessment department is in a quandary: Should it collect or discontinue the recovery of repair cess tax from cessed buildings which have got commencement certificates (CC) for redevelopment? There are 1,133 cessed buildings which have obtained CCs and owe repair cess tax arrears of Rs 93,05,52,798 crore (approximately Rs 94 crore).
There are approximately 17,057 cessed buildings, which include pagdi buildings, only located in South Mumbai, of which 1,133 buildings have received CCs and are no more liable to pay the repair cess tax, as per a state government resolution (GR). According to the GR, once the cessed buildings receive a CC, the collection of repair cess tax stands to be discontinued.
However, in 2013, the state told the BMC only the Maharashtra Housing And Development Authority (MHADA) has the power to decide the issue of discontinuing or continuing to collect the cess and the BMC is only a tax collection mediator, so there is no question of instructing the corporation to cease the recovery. This reply of the state has only served to further confuse the BMC.
A senior civic official told The Free Press Journal the BMC gets a five per cent commission on the annual recovery of repair cess tax. “Since tenants are well aware of the state GR, they do not pay the money and the arrears eventually pile up. Of the total Rs 151.51 crore repair cess tax for 2016-17, BMC has only managed to recover Rs 54 crore,” remarked the official.
“If the state sends a notification asking us (BMC) to discontinue the collection of tax from buildings which have CCs, then regular taxpayer provisions apply to them. If the BMC earns five per cent on the recovery of cess currently, and if these buildings do not pay the cess, then regular tax bills can be issued on their names. The corporation can then earn 100 per cent revenue out of this,” the official said.
So far, of the 1,133 buildings having CCs, around 540 building tenants have approached the BMC, asking it to refrain from issuing repair cess tax bills on their names. Cessed buildings are those built on Maharashtra Housing And Development Authority (MHADA) land and since MHADA has no assessment and collection department, the BMC does the job of recovery of cess on their behalf, upon the state govt’s instruction.
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