Civic body defines luxury to compute property tax

MUMBAI: Even as builders vie with each other to sell high-end flats to prospective buyers, the civic body for the first time has defined what constitutes luxury and intends to claim its pound of flesh.

In its draft of rules to compute property tax based on capital value, the civic authority has defined a luxurious building as a Reinforced Cement Concrete building (RCC) with a swimming pool along with at least one other amenity of a list comprising a gymnasium, club house, jogging track, multi-level car park with three or more levels, health club, servants' quarters with toilet facility or private terrace as part of each flat in a building.

The BMC had constituted a three-member committee to draft the rules that included D M Sukhtankar, former municipal commissioner and cabinet secretary and now convener of the well-known NGO Action for Good Governance and Networking in India, former secretary D Choudhary and Dr Namavati, senior counsel.

Sukhtankar said there was a need to define a luxurious building because it command a higher capital value and people who can afford to pay huge sums to purchase a flat in such buildings can certainly afford to pay higher taxes.

"We wanted to devise a relatively simple definition so that there was no individual discretion. There would also be no room for interpretation by lower level officials of the assessor and collector's department,'' said Sukhtankar. With individual discretion, there is scope for corruption which the committee wanted to eliminate.

The panel had looked at various articles, advertisements and other research material to understand what people looked for while purchasing a house.

S S Shinde, joint commissioner, assessor and collector department said the objective of defining a luxurious building was simply to be able to compute property tax. "We did not define luxury at the level of individual flats as it would then get very subjective,'' he said. Sukhtankar added that the amenities defined for a luxurious building ultimately go with the homes in that building.

"We do not know if this definition will change other transaction features. This is strictly for the BMC's use to compute tax and cannot be enforced on the real estate market,'' added Shinde. Sunil Mantri, president, Maharashtra Chamber of Housing Industry said the Ready Reckoner rate already took into account various factors while computing capital value.