[Resolved]  BMC Mumbai — big hording installenrd without permission from shop owners

Tele Fax : 2828 03 08
Tel : 2828 12 93
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F.O.O.D
FLAT OWNERS’ ORGANISATION OF DAHISAR (Regd.)
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Office : 17, Parshwa Giriraj, H.S..Joshi Road, Dahisar (E), Mumbai – 400 068.
Reg. No.:F-23138(Mumbai) dtd. 29/8/2001
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Ref. No. _______________ Date:- ______________


To,
The Chief Commissioner
Municipal Corporation of Gr. Mumbai
BMC Headquarters, Fort, Mumbai – 1.


Subject : Objections to determining and levying of Assessment tax on the basis of what is called capital value system w.e. from April 2010.

The FOOD is an organization promoted by flat owners of Dahisar and more than often the aim of organization is similar to what a common tax payer Mumbaikar residing in Suburban Mumbai would like to attain.

For reasons beyond our control the organization could not focus on this very serious issue (of captioned subject) and candidly admit having not received or come across any useful articles of writings or G.R. or orders and decisions taken by concerned competent authorities and yet being well aware that the flat owners / purchasers of this part of Mumbai Suburb is likely to be hit directly and very harshly we first draw your attention to some basic facts :-

a) In view of scarcity of land having potential to build residential dwelling units on massive scale – which fact is well known and admitted and acknowledged by one and all including executive authorities – and thanks to popular measures – hitherto – adopted by all the ruling and opposition political parties – more than 4 million slum dwellers have been successfully settled, resettled and / or rehabilitated or shall be rehabilitated usurping the precious land that – could have been made – available to build legal and approved multistoried buildings.

b) If the Town Planning authorities ever thought how and why Mumbaikars are spending their life time savings by neck deep borrowing to purchase as small flat called a one room kitchen adm. 375 sq. ft. area situate as far as three km. from railway station in distant suburbs like Dahisar, Borivali which dream house could cost not less than Rs. 25 lakh ... just because the Mumbaikar tax payer can afford ... when they and all those who think similarly are cent percent wrong.

c) A young working couple earning about Rs. 30, 000/- per month which again is not a certainty – burdening themselves with home loan to the extent of 85% of the cost of flat making them liable to pay EMI o[censored]pto Rs. 16, 000/- per month just because they desire to have a decent flat in a decent area that happened to be within the jurisdiction of Mumbai city and suburb should serve as a wake up call to you and all high powered authorities for simple reason that here on one side comes Slum Rehabilitation Authority so that slum dwellers could be settled rehabilitated and have a decent living standard matching that of rest of Mumbaikars and here on the other side a Mumbaikar himself buying a flat causing entire life savings to drain turning to a dead investment and as if the liabilities were not enough now comes higher assessment tax that becomes payable for purchasing the flat at the highest rate - -- which is unjustified and unacceptable.

d) Have you, your officers and Town Planning authorities afforded quality time to know why a flat in Dahisar that should have cost not more than say Rs. 25 Lakh for 700 sq. ft. area 2 bedroom apartment is costing more than Rs. 60 Lakhs? What rates has gone up? The building materials? Labour charges? Damages (read corruption)? Or just scarcity of land?

Our study indicates 99% of purchasers of flats in Mumbai Suburban area are original Mumbaikars and not outsiders.

Despite this the year wise average market rates for residential flats in Dahisar area are as follows.

Year Rate Cost of 375 sq. ft.1 room kitchen flat
1985 ... @ Rs. 300/- PSF ... Rs. 1, 25, 000/-
1990 ... @ Rs. 600/- PSF ... Rs. 2, 25, 000/-
1994 ... @ Rs. 900/- PSF ... Rs. 3, 37, 500/-
1995 ... @ Rs. 1750/- PSF ... Rs. 6, 56, 000/-
2000 ... @ Rs. 1900/- PSF ... Rs. 7, 12, 000/-
2005 ... @ Rs. 2200/- PSF ... Rs. 8, 25, 000/-
2007 ... @ Rs. 2750/- PSF ... Rs. 10, 30, 000/-
2010 ... @ Rs. 6750/- PSF ... Rs. 25, 30, 000/-

The above tabulation suggests that ditto 1995-96 the sudden boom in the real estate market have gone sky rocketing since 2007. Why not appoint a commission to find the facts and reasons behind such unprecedented surge in the real estate market? The truth will come out in black and white and the authorities such as yours shall be forced to rethink twice before linking the Greater Mumbai’s capital base value which in turn is linked to true market value determined under Bombay Stamp Rules, 1995 and the assessment tax that becomes levy-able accordingly.

e) Does the executive authority believe the income of Mumbaikar Tax payers have gone up in proportionate to the impending capital based assessment tax that could become payable in respect of flats in the new buildings? Or the repayment capacity of ordinary Mumbaikar has multiplied matching the real estate boom?

It is evident that in the year 1994-96 and the current period since 2007 till date – the rates have touched an all time high and if we the tax payers demand an explanation or rather justification as to why affordable housing units are not made available to Mumbaikars then the onus automatically is on the authorities like you viz. the BMC and Maharashtra State Government to answer to those questions. Instead we are asked to pay higher tax for buying a flat which is unaffordable by any standards.

The plain truth is also that the government or municipality failed to provide sufficient dwelling units on ownership basis and allowed precious land to be grabbed by the slum lords due to utter lack of planning.

f) How could executive authorities ever could imagine that a person buying a flat for sum of Rs. 50 Lakhs which in reality ought not to cost him more than Rs. 25 Lakhs is capable of paying higher assessment taxes? Why not gather data from reputed builders who have sold flats by ‘full cheque’ payment?

99% of purchasers have secured home loans.

That means, a flat worth Rs. 25 Lakhs in Dahisar is worth Rs. 75 Lakhs thanks to flat purchasers over straining themselves to their limits in terms of borrowings.

Kindly read and know the facts from grass root level like our organization. Flat purchasers are not rich Mumbaikars and paying the price to be in India’s most western and modern city to his likings and striving to stay amongst a decent residential building they thought they could afford.

We dare BMC to publish a series of advertising in News papers and electronic media informing the very high assessment tax these flat owners may have to pay ... and see for yourselves the difference it will make. The real estate market shall come crashing down. The high end properties shall starve for fit buyers. The flat purchasers shall weigh every available option before purchasing flats in huge towers having astounding amenities which he never thought shall spur the assessment tax in multiples.

Yes – you are wrong Mr. Municipal Commissioner. Flat owners are totally unknown of what lies ahead and none of them are in fact interested to know, because they trust this system. A person paying Rs. 1, 800/- per month for occupying flat adm. 650 sq. ft. carpet area shall not be mentally prepared to pay Rs. 6, 000/- per month for occupying 900 sq. ft. carpet area in a building situate next to his building.

Now coming to more serious business ... objections to capital based value systems.

a) Who decides Annual Statement of rates for determination of Stamp Duty? It’s Town Planning (market value and stamp duty). The Chief Controller of Stamps – in turn – publishes annual statement of market rates. You ought to know and peruse the provisions of Bombay Stamp Rules, 1995.

The Sub Registrars is required to furnish the information to Inspector General of Registration based on the transactions and documents registered with him for the purpose of preparation of annual statements of true market rates whereupon the annual statements of true market rates shall be published.

Now the million dollar question is – how come the residential rates of say Dahisar and Borivali could be compared and / or taken as true rates if the transactions are very few or negligible in one of the most developed area vis a vis – under developed / developing area ? Read this!

True market rates for Dahisar area as per Ready Reconer published by I.G.R. Pune are as under :

Zone sub-zone rev. village
and location R.R.for flats
Rs. / per sq. mtr.
89 411 Vil. Dahisar near Rly. Station (East) 34¸600/­
89 409 Vil. Dahisar near Rly. Station (West) 41¸000/­
88 408 Vil. Mandpeshwar near Dahisar River (W) 43¸400/­
87 394 Vil. Eksar near Dahisar River (W) 45¸900/­

Now compare with rates at Borivali West which is prime area

87 403 Vil. Eksar, S.V. Road Borivali (W) 44¸500/­
87 396 Vil. Eksar, Bet. L.T. Road and Devidas Lane 37¸000/­/­


A glance and comparison of rates amply indicates that the rates are much below than what is actually prevailing market rates. Further the rates at Dahisar (West) is higher than one of the prime area viz. between L.T. Road and Devidas Lane (surrounding Prabodhankar Thakre Theatre).

The glaring disparities are not only annoying and eye catching but also suggests that the stamp duty department particularly Town Planners (market value and stamp duty) are not doing their jobs properly and going by mere book rules which is – as in this case evident – affecting the flat owners at Dahisar.

As per Article 243 w of Constitution (seventy fourth amendment) Act, 1992, the power authority and responsibilities of Municipalities are clearly set out therein which inter-alia says ...
(a) (i) The Municipalities with (such) power and authority to enable them to function as institution of self government may contain provisions with respect to ... the preparation of plans for economic development and social justice; ...”

Read further the description of property tax as contained under section 140 of MMC Act, 1888 which refers to inter-alia a) Water Tax, b) Additional water benefits tax, c) Sewage tax, d) General Tax and e) Education Cess.

Without going into the details of ratable value and residential letting rate that concerns us as flat holders – most and direct – it was indeed time to adopt an entire new concept to determine the actual property tax that became due and payable particularly when flat holders of South Mumbai staying in a plush apartment is compared with 10 to 20 year old apartment situated 2 km from Dahisar / Borivali Railway Station.

When an NCPA apartment was sold @1 Lakh p.s.f. it made headlines all over print and electronic media. Bouquets received ... brick bats were bound to be expected.

Has BMC ever undertaken a detailed study who what and how the real estate prices are determined, or, automatically decided with fewer land holders in possession of acres of lands allowed to go scot free, without any control, effective or ineffective ULC Act would have made – had it been implemented honestly and bonafide?

A purchaser of a flat situate in Dahisar / Borivali adm. say 700 sq. ft. carpet area in say – 30 storied tower – acquired by purchase for sum of Rupees - say – 70 lakh – viz. @ Rs. 10, 000/- p.s.f. of carpet area is deemed wealthy enough to pay to BMC Rs. 5, 000/- plus per month by way of property tax although a 30 year old building very next to said tower dwelling similar size flat could be purchased for sum of Rs. 35 Lakh @ Rs. 2, 500/- p.s.f. of carpet area. The market value for stamp duty purpose could be less than Rs. 25, 00, 000/- and if you desire we could furnish you many such examples which shall keep you guessing as regards actual and prevailing market rates.

Howcome BMC is empowered to determine the latter as genuine transaction and not involving black money?

The latter continue to pay Rs. 1400/- (max.) @ Rs. 2.00 per carpet area and former shall be liable to pay @ Rs. 7.00 p.s.f. of carpet area because it is so provided in the capital value based new property tax structure / slabs.

Why a flat holder should pay 2 to 3 times higher property tax to BMC for purchasing a new flat in a tower for payment made entirely by cheque?

Further, if BMC arbitrarily deems it fit to levy such property tax, and in the event the real estate market rates crash in a couple of years – say by 40% - as it’s rightly feared by pundits – shall the BMC accordingly lower the property tax amount immediately?

The answer – we know – is strict NO.

Then why take the current market rates as true market rates as basis for capital value base system to determine property tax?

If the BMC authorities are convinced that the new tax structure is indeed justified, then we beg to differ.

a) A person buying a flat in Dahisar for Rs. 70, 00, 000/- is not a rich person just because he could afford to buy it ... and it is incorrect to say he therefore could afford to pay 2-3 times higher property tax.

When there is an acute shortage of housing stock, and a person after living in this cruel city for over 4 decades working 12 hours a day non stop finally calls it a day, deems it is time to enjoy the fruits of his labour and purchases a decent dwelling home situated next to his old building, you can’t separate him from others and ask him to pay higher BMC property tax which shall burden him in the remainder of his life ruining his plan of enjoying being in a dream house. This is not a sentimental stuff. We dare you - the BMC to come out with ideas to provide residential flats at reasonable rates in far flung area like Dahisar and Borivali. If BMC can’t provide affordable housing then you should not make affordable housing turn unaffordable just because people are buying decent flats.

MHADA has exhausted its land holdings and dwelling units stock.

M.S. Govt. has repealed ULC Act 1976 and since then not come out with a single enforceable plan to provide flats to Mumbaikars who just are pumping their life time savings into buying a decent home.

Private builders have caused havoc ... a building in Mira Road (Lodha Aqua) is declared to be situated in Dahisar ... An apartment in Thane – Ghodbunder area – about 7 km from Thane Station – are offered air conditioned flats and swimming pool for men and children - giving impressions that all flat purchasers are ‘elite’ persons.
How untrue. Could you visit a project at Mira Road (East) called Broadway Avenue constructed in the year 1990 or thereabout with provisions for swimming pool. Entire Mira-Bhayander area is still starving for potable / tap water and you could see the swimming pool turned into a pond with frogs and toads making merry for finding a new urban jungle! Now if you thought providing swimming pool was a gimmick? Then you are wrong. The flat purchasers never asked for swimming pool but thought if a swimming pool is provided then how come water shortage shall be there? And many purchasers purchased flats. Our study indicates those who purchased at the rate of Rs. 600/- p.s.f. sold the flats 8 years later at the same rate!

b) If BMC authorities agree that the determining property tax on the basis of capital value is correct, then let BMC have open meetings, with flat holders all over Mumbai city and suburbs to know why they would not like to pay Rs. 70 Lakhs for an apartment which in reality ought to be worth not more than Rs. 35 Lakhs, and what compelled them to this extreme step to pour their entire life’s savings to buy a decent house?

Imagine what if following two measures are announced by M.S. Govt. ...

- Raise the FSI from 1 : 1 to 1 : 6; -
Make it mandatory for builders to build smaller flats of les than 300 sq. ft. carpet area and it be allotted thro MHADA ... the market rates shall come down by 40% and this time you shall agree with us.

- For more than 2 decades we have not witnessed coming up of any Mega housing complex such as Yogi Nagar at Borivali, Gokul Dham at Goregaon, Anand Nagar at Dahisar ... why?

While BMC, ... M.S. Govt. and Central Govt. have failed ... to provide affordable homes on one hand – Slum dwellers are declared legal tenant, (project affected persons) and provided decent flat which is free of cost; and other hand, the LIG Mumbaikar after years of hardwork turns MIG and then HIG ... and when he dreams to buy a decent home you come out with fantastically cruel ideas.

Virtual No tax (20% of tax) for slum dwellers for 10 years ... and upto 300% more tax for new flat purchasers. Is this social justice?

Not a single slum dweller has ever come on the street demanding they be resettled and rehabilitated in a new multi storied apartments, yet SRA is set up and they are pushed into multi storied buildings.

Not a single flat owner / purchaser who is capable / desirous of buying a 700 sq. ft. carpet area flat in distant suburbs like Dahisar Borivali has purchased / shall purchase new flats with notice and knowledge that they shall have to pay upto 200% or 300% higher property tax to BMC.

This letter albeit – very late – is an eye opener to BMC.

We represent the Mumbaikar Flat Owners who are reluctant to even write a few lines in protest against proposed higher BMC property tax ... but when harsh facts – descends unto them and they realise what they shall have to bear with, disputes after disputes shall be made, litigations shall follow ... but most importantly and unfortunately – they shall suffer silently and wonder why out of 150 million Mumbaikars only few thousands are identified, set apart and punished for their desire to live in a decent apartment which was their fulfillment of long cherished dream and finally wonder why none of BMC officer ever tried to understand their side and in fact betrayed them ...?

If BMC hikes property tax then – the Mumbaikars shall suffer at the hands of few Mumbaikars.

Where and to whom we would complain?



Vivek Sthalekar
Secretary
Mobile :[protected]
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