Mumbai: The BMC has proposed reducing the late payment penalty on property tax to 1% per month in an effort to encourage timely payments and curb the rising number of defaulters.
Civic officials argue that the current penalty is excessively high and acts as a deterrent rather than an incentive. Although the proposal was submitted to the state government three years ago, it continues to await approval, leaving taxpayers burdened with steep fines.
The BMC currently imposes a 2% monthly penalty on property tax defaulters for delayed payments. In the financial year 2024–25, this penalty generated an additional Rs. 178 crore in revenue for the civic body. However, officials say the steep rate—equivalent to 24% annually—has sparked consistent complaints from taxpayers and is fueling a rise in outstanding dues. "The 2% monthly late fee is quite steep, so we submitted a proposal in 2022 to reduce it to 1%,” a senior civic official said.
He further explained that the total outstanding amount for many property owners continues to grow, with penalties often surpassing the original tax amount. “This disproportionate burden discourages taxpayers from clearing their dues. While the decision to revise the penalty must be taken at the state cabinet level, the proposal has been stuck in limbo for the past three years,” he added.
In a record, the BMC has collected property tax amounting to Rs6,388 crore for fiscal 2024-25, the highest since 2010. However, the BMC has struggled to recover Rs. 22,000 crores in outstanding dues accumulated over 15 years.
This amount also encompasses Rs. 550 crores owed by agencies like Maharashtra Housing and Area Development Authority (MHADA), Mumbai Metropolitan Region Development Authority (MMRDA) and others. Mumbai currently has nearly 10 lakh registered taxpayers.
