Hike in ready reckoner rates leads to rise in property tax bills by 8-20 % in Mumbai

Indian Express

5 days ago

Maharashtra government's decision to increase ready reckoner rates in all major municipalities of Maharashtra ahead of the upcoming civic polls has resulted in an increase in the overall property tax bills in Mumbai by a margin of 8-20 per cent – a first in the last ten years.
Mumbai's Municipal Commissioner Bhushan Gagrani, however, clarified that there has been no revision on Mumbai's existing property tax rates.
Property tax is a cess charged by the Brihanmumbai Municipal Corporation (BMC) which comprises multiple components. While the larger aspect of this cess is determined by the ready reckoner rate (RRR) or the minimum property value determined by the government for revenue collection, the remaining valuation is determined by factors like age and condition of the property and sewerage charges among others.
'The BMC hasn't increased the property tax rates. In Mumbai, property tax is directly linked with RRR. Therefore, the government's decision of hiking the overall increase in RRR has impacted the property tax rates in Mumbai resulting in an 8-20% increase across municipal wards. All the components like sewage charges stay the same in the bill. The new tax rates will be reflected in the bills that are being issued in the current financial year,' Gagrani told The Indian Express on Tuesday.
Property tax is one of the key sources of revenue for the BMC. For the financial year 2024-25 the BMC collected property tax amounting to Rs 6,195 crore – making a 20% jump from the previous fiscal year.
The Mumbai's Municipal Corporation Act states that the BMC can increase property tax after every five years.
However, the tax rates have not been revised since 2015. In 2020, the civic administration was supposed to increase the rates however, the decision was deferred following the pandemic outbreak and has been pending since.
Meanwhile, this year in the civic budget, the BMC had introduced a new cess called Solid Waste Management (SWM) charges. This cess will likely come into effect from the 2026-27 financial year.
Meanwhile, former elected representatives have criticised the BMC administration. Former Congress corporator from Bandra Asif Zakaria said that all property tax bills being issued are ad hoc and that the BMC clarifies the same in the footnote of each bill.
'The bills that BMC issues are ad hoc in nature, therefore what is the need of issuing them in the first place? The courts have already asked BMC to formulate a committee and work on the new tax rates. However, that's not happened yet,' Zakaria said.
'The Mumbai Municipal Act states that after every five years, the BMC can revise and charge tax as per capital value or up to 40% of the previous year's tax or whichever is less. Since the capital value will always be higher, it clearly negates the justification of raising the tax rates on the basis of RRR,' Zakaria said.
On March 31, the state government increased the RRR for the ongoing 2025-26 financial year by an average of 3.88 per cent across the state.
Meanwhile, Mumbai has recorded an increase in RRR by 3.39 per cent — slightly below the state average, followed by 3.36 per cent in rural areas and 3.29 per cent in influence zones. Municipal corporations other than Mumbai have recorded an average increase of 5.95 per cent.