|
|
|
You can get e-magazine links on WhatsApp. Click here
|
|
|
|
|
|
HRAWI to protest against BMC’s capital value method of tax computation
|
|
Thursday, 31 July, 2014, 08 : 00 AM [IST]
|
|
Libin Chacko Kurian, Mumbai
|
|
fiogf49gjkf0d The Hotel and Restaurant Association of Western India (HRAWI) stated that it would protest against the capital value method of property tax computation, adopted by the Brihanmumbai Municipal Corporation (BMC) with retrospective effect from 2010.
HRAWI and other associations, East India Hotels Ltd, the Taj Group of Hotels and other hotels, architect and town planner Jashwant Mehta and other individuals, and a number of institutions separately filed public interest litigations (PIL) against the change in the taxation system in Bombay High Court, but they haven’t yielded any results.
The civic body had replaced the rateable value method of property tax computation, which was based on rent to capital value system, which was, in turn, based on the property's market price, with the new method.
The change in the method of computing tax was believed to be a step in the right direction (i.e. it was believed that it would bring in more consistency and transparency in the tax system, which is several years old).
Mehta stated that the filed applications under the Right to Information (RTI) Act, but the replies made it evident that BMC was unaware of the amount which was collected or would be collected as property tax. Moreover, he termed the new method of tax computation unaffordable.
The adoption of the latter resulted in an increase in the property tax of both residential and commercial properties, which, in turn, created a huge disparity between old properties and newer ones.
Mehta, who is also an HRAWI member, said, “The new tax system adopted by BMC is illogical and irrational and would hit the hotel industry hard. The capital value system would hit both the industry and tourism hard.”
“It has become impossible for starred hotels to start operations in Mumbai, owing to the heavy taxes. Starred properties would begin to show the tendency to become unstarred ones, due to the tax differences between the two,” he added.
“Consequently, the development of the city would come to a halt, and the city would face a economic backlash. Service apartments would also witness a setback, as the new property tax system would affect affordability,” stated Mehta.
Kamlesh Barot, former president, HRAWI, said, “Starred hotels, especially those catering to the budget segment, are also likely to take a big hit.”
“Against the 0.652 per cent property tax paid by unstarred hotels, those properties that are between one-star are four-star hotels would have to pay 1.303 per cent tax,” he added.
“If we add the user category factor of one for unstarred hotels and 1.10 for starred ones, the difference in taxes between them would be 220 per cent. This would make operating as a starred hotel, especially in the budget segment, totally unviable,” Barot stated.
“Its consequence on tourism would be disastrous. The quality of services provided would witness a big hit, and we may see a drop in mid- to high-yield tourists. The difference between unstarred and starred budget hotels is not in the capital value, but in the quality of service,” he added.
Last July, BMC officials promised to set up a committee to revise the tax system. However, no action has been taken yet.
|
|
|
|
|
|
|
|
|
|