Maharashtra Chief Minister Uddhav Thackeray on Saturday announced the decision to waive property tax on houses up to 500 square feet within Brihanmumbai Municipal Corporation limits.
In a virtual meeting, Thackeray directed the administration to implement the decision immediately. The decision comes ahead of the Mumbai Municipal elections scheduled for next month. The state expects 16 lakh families to benefit from the waiver.
While affordability of homes in Mumbai has improved during the pandemic, it continues to be one of the costliest property market in India. The city stood last in Knight Frank's annual Affordability Index 2021 that calculates ratio of equated monthly installments to total income of an average household.
At 53%, Mumbai's threshold affordability ratio was higher than cities like Bengaluru, Pune, Chennai, Hyderabad, Kolkata, Ahmedabad and National Capital region. However, the financial capital has improved the most since 2011, according to the report.
"From the consumers' perspectives, the waiver of property tax for affordable segment will be a great boost to sentiments for end users in the category as the waiver will reduce ongoing expenses towards owning a house and help add to their annual household savings," said Shishir Baijal, Chairman and Managing Director of Knight Frank India. "This decision, which was in deliberation for quite some time now, will provide big relief."
The tax waiver will, however, hit the Brihanmumbai Municipal Corporation's revenues. Baijal said that this will be recovered by the rebound in the real estate market as mid-to-higher end segment apartment sales have consistently improved in the last five quarters. "We expect the bullish trend in the property purchases to continue in the new year."
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