Your home in Mumbai is now a costlier dream. With falling revenues and growing expenditures for infrastructure projects, the BMC (Brihanmumbai Municipal Corporation) is planning to levy a surcharge of 1% on buying and selling of real estate properties in Mumbai, which is anyway the country’s most expensive property market.
Real estate in Mumbai is going through a slowdown since the past four years. According to industry sources, property sales have fallen by 25%-35% in Mumbai as compared to the previous year. The proposal comes while the market was just coming out from the shock of demonetisation and within a week of the state government increasing the ready reckoner rate (RR) by 3.95%.
‘Negative impact on the market’
Rajeev Jain, director of Nirmal Lifestyle said while talking to the media that the BMC’s surcharge proposal, if approved, will only add to home buyers’ burden of high realty rates.
It means if you buy property worth Rs 1 crore, you will have to pay Rs 1 lakh as surcharge on it to the BMC. This will be over and above the existing stamp duty and registration fees, which roughly come to 6%.
The builders will put the entire burden on the buyer, so they will have to shell out the entire cost. Affordability of houses get further affected due to this.Ramesh Prabhu, Chairman, Maharashtra Societies Welfare Association
Although the common man is going to suffer, the luxury segment is also going to be affected. The property rates for premium properties are already high and a total of 7% taxation would be a very big amount.
Why This Surcharge?
The BMC is the richest civic body in the country, but it had to slash its budgetary outlay from Rs. 37,052 crore to Rs 25,141. It is a drop of Rs 11,911 or 32.14% from last year.
The steep fall comes in the backdrop of the GST (Good and Services Act) roll out this year, which will abolish Octroi, BMC’s highest income generator. With a loss of Rs 7,000 crore annually and a string of infrastructure projects going on, the BMC needs a new source of income, says Commissioner Ajoy Mehta, who presented the budget.
The BMC has huge committed liabilities in terms of remaining cost of work orders already issued, at Rs 9,988.89 crore.
But the surcharge proposal will require an approval from the state government. The Fadnavis government will have to clear it through the Maharashtra Stamp Act, 1958 and the MMC Act, 1888.
Sources say the state government is not in favour of putting an additional burden on the consumers. But, while making any decision the state government will need to consider that the BMC heavily depends on the sum of Rs. 3,000 crore, which it expects to collect with this surcharge.
Now the state government has to decide how to fund infrastructure projects without further burdening the common man’s dream of a home in Mumbai.
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