Mumbai: At a time, when the BMC is claiming it is strapped for funds, it has been unduly sluggish in collecting property tax dues – its prime source of revenue since the scrapping of octroi in July 2017.
As the BMC gets ready to unveil its budget on Tuesday, The Free Press Journal has learned that with less than two months left for the end of the current fiscal, the civic body is staring at a shortfall of Rs 650 crore in property tax collections, compared to the yield last fiscal. According to figures collated till February 2, the civic body has managed to collect only Rs 2,878 crores, as against its target of Rs 5,100 crore.
Last fiscal, till February 2, 2019, the BMC had collected Rs 3,528 crore as property tax.
To achieve its target for the fiscal, the tax department will have to collect Rs 2,222 crores in less than two months, which sources in the BMC say will be a tough nut to crack.
A senior officer from the Tax Assessment and Collection Department said, "The BMC will find it a struggle to close the revenue gap in less than two months. Given our past experience, it is not possible to generate more than 20 percent of the estimated revenue target in the last couple of months. We will have to focus on tax collections and take austerity steps to save money.”
The effect of this shortfall in collection will be seen in the civic budget 2020-21, which will be presented on Tuesday afternoon, sources in the BMC said.
As the civic body has suffered a fall in its revenue, this could lead to a slash in capital expenditure on budgetary provisions for many departments this year.
In review meetings held last month for setting budgetary estimates for 2020-21, officials from the chief accountant (CA) department had alerted all civic departments on allocations for capital expenditure.
Sources said that most departments may be facing a cut of 15 to 20 percent in their budget allocations.
Not just property tax collection but the civic body has also witnessed a drop in revenue in the Development Plan Department, another important contributor to the BMC coffers.
Other than the slowdown in real estate, which has led to a decrease in the assessment of new properties, the issue of migrating to a new tax regime of imposing capital value tax on properties, which is sub judice, has hit revenue collection.
Besides this, lack of clarity on the issue of exempting properties measuring 500 sq ft or less from the property tax net, and the state government’s failure to fully compensate the corporation for the loss of octroy, too, has resulted in a situation where the civic body is staring at ending the year with a budget deficit.
