Real-estate developers in Mumbai will have to pay three years' advance property tax to the Municipal Corporation of Greater Mumbai for taking up new projects. This could increase the cost of apartments in the commercial capital.

This move comes against the backdrop of Rs 6,000 crore that builders, housing societies and commercial establishments owe in tax arrears to the Corporation.

The Maharashtra Minister of State for Urban Development, Mr Bhaskar Jadhav, on Monday said that the decision has been taken so that tax arrears don't get built up.

Making the announcement in the Legislative Assembly, the Minister said that in many cases builders don't inform apartment buyers about unpaid property taxes. Once the apartment gets sold, the new owner gets saddled with a huge tax liability, he said.

Mr Jadhav said a new policy to tackle the issue of unpaid taxes will be formulated by the State Government. However, he did not specify a deadline for the payment of the property tax.

In the last fiscal, the Corporation collected Rs 3,320 crore as property tax.

Housing expert Mr Chandrashekhar Prabhu said that if the new advance tax gets implemented, then the property costs across Mumbai will increase as builders will pass on the cost to customers.

The Leader of Opposition, Mr Eknath Khadse, said that until the apartment is handed to the new owner, the developer is responsible for the payment of property tax. Many builders take money as advance tax from the new owners but don't pay it to the Corporation.

“This is a fraudulent behaviour on the builders' part. Will the State Government recover the dues?” he asked.

The Congress MLA, Mr Kalidas Kolambakar, said that if builders don't pay taxes, then the Corporation should issue stop-work notices to them.

>rahulw@thehindu.co.in

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