IF YOU own property bigger than 500 sq ft in the island city you will have to , pay more property tax soon. And property owners in the suburbs can expect to pay less. Property tax is paid annually; if you live in a housing society it , gets included in your maintenance bill.

On Tuesday, a Joint Select Committee of the State Legislature, comprising legislators from all political parties, approved a capital value-based property tax model for Mumbai. The capital value of a property is its market value as calculated in the Ready Reckoner, the state government's official document on property rates. Currently, Mumbaiites pay property tax on the basis of the rent commanded in the area. The new system will make the assessment transparent.

Based on the Committee's recommendations, the Legislature will amend the Brihanmumbai Municipal Corporation Act, 1888, so that the civic body can adopt the new and transparent property tax assessment system. The amendment is likely to be cleared by the Legislature in the monsoon session, to be held in July .

As rents in the island city were frozen some 60 years ago under the Mumbai Rent Control Act, the proposed system will affect those who own real estate in south and central Mumbai. Suburbs, which do not come under this Act, have been paying more property tax due to high rent rates. The new system will be the state's way of rationalising property rates across the city .

Property tax liability of residents and commercial establishments in the suburbs are likely to go down by 20 to 25 per cent, according to the commit tee. In the island city residential prop , erties that are 500 sq ft or less will get a hike exemption for the first five years. Though the amendment will give the BMC the option to select between the current and new system, Shiv Sena legislator Subhash Desai said the civic body will opt for the new one. The Sena is the ruling party in the BMC.

The state government had tabled the proposal before the Legislature in 2006, suggesting the switchover to capital value-based property tax. However, legislators felt that the method would force residents of chawls and some 19,000 old building in south Mumbai to pay more in taxes. This is one reason why the Committee has relaxed the hike for smaller flats. It will also help political parties in the run-up to polls as most of the target voters stay in the smaller flats.

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