The property tax exemption for the cheap sector is expected to improve consumer confidence in the category. On January 12, the Maharashtra cabinet approved the state government’s intention to exclude houses up to 500 square feet in Mumbai from property taxes. The Maharashtra government announced on January 1 that property taxes on residential units of up to 500 square feet located inside the Mumbai municipal area limits will be totally waived. On New Year’s Day, Chief Minister Uddhav Thackeray announced the decision.
This decision, which was deliberated for quite some time, will provide a big relief, according to Baijal. For the BMC, the property tax waiver will have an impact on revenues. However, this will be compensated by the real estate market bounceback, with sales of mid to higher-end segment apartments increasing consistently in the last five quarters, he said. Niranjan Hiranandani, Vice Chairman of NAREDCO and MD, Hiranandani Group, concurs, “This will enhance acceptance of compact homes in Mumbai. The move by the authorities will be positive for affordable housing. This will also prove to be advantageous for redevelopment and Slum Rehabilitation Authority projects offering homes that are 500 sq ft or less in size. One hopes that similar or partial waivers for slightly bigger homes, of around 750 sq ft, will also get announced. These will have a positive impact on affordable housing.”
It will benefit 16.14 lakh residential units, the Chief Minister’s Office said in a statement. The waiver will result in a revenue loss of Rs 462 crore for the exchequer. The Mumbai municipal corporation will bear a loss of Rs 417 crore while the state government will shoulder the remaining Rs 45 crore deficit, officials said. Commenting on the decision, Shishir Baijal, Chairman and Managing Director of Knight Frank India, said that the waiver for the affordable segment would be a great boost to sentiment for end users in the category. This would reduce ongoing expenses towards owning a house and help add to their annual household savings, he added.
State urban development (UD) minister Eknath Shinde on Monday announced a property tax waiver for all homes measuring less than 500 sq ft, across the city of Navi Mumbai. However, the minister did not spell out the timeline of implementation. Interestingly, a proposal mooted by NMMC for the waiver has been pending at the UD department for over two years. Recently, the chief minister announced complete waiver of property tax on homes up to 500 sq ft in Mumbai. “Based on the decision taken for Mumbai, Navi Mumbaikars will soon get the benefit from the property tax waiver. The proposal will be cleared shortly,” said Shinde.
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