BMC chief warns of fall in revenue if builders' charges slashed by half
Publish on : 2020-10-09 13:14:08
t is important to submit that if this reduction is accepted by the government, this will adversely impact the revenue of the BMC,” Chahal said. “The reduction factor of 50% for all premiums/charges levied will be made on receipt of directions from the state government,” Chahal has said in his letter.
MUMBAI: A 50 per cent reduction in premiums and charges paid by developers to the BMC as recommended by the Deepak Parekh committee will adversely impact the civic body’s revenues, Municipal Commissioner Iqbal Chahal has told the state government, while giving BMC’s ‘concurrence’ to the proposed reduction.
Chahal’s letter to Bhushan Gagrani, Principal Secretary, Urban Development (UD) department ‘concurring’ to reduce premiums and charges for builders by 50% comes amid stiff opposition from the ruling Shiv Sena and opposition parties.
In his letter dated October 1, Chahal has said premiums and charges will be reduced by 50 per cent if there are directions from the state government. “The BMC gives concurrence for reduction in all premiums/charges/levies/cess/premium for staircases, lift well and lobbies, open space deficiency by 50% under the Development Control and Promotion Regulations (DCPR) 2034, which is payable to the BMC as well as to the state government, the Maharashtra State Road Development Corporation (MSRDC), Dharavi Redevelopment Project (DRP) for a period of one year upto December 31, 2021.
However, it is important to submit that if this reduction is accepted by the government, this will adversely impact the revenue of the BMC,” Chahal said. “The reduction factor of 50% for all premiums/charges levied will be made on receipt of directions from the state government,” Chahal has said in his letter.
With the state government abolishing octroi, which was the BMC’s biggest source of revenue, premiums from builders is currently one of the biggest revenue sources for the BMC after the remuneration it gets from the state government for Goods and Services Tax (GST) collection.
In July, the state government had sought the BMC’s views on whether it is feasible to reduce 50 per cent of premiums that the BMC collects from developers and collect the remaining half only when the projects are completed and builders apply for an Occupation Certificate (OC), in lines with a recommendation by the Parekh committee set up for boosting the real estate sector.
The Parekh panel has recommended that there must be a 50 per cent cut in different premiums taken by the BMC such as for enhanced FSI, TDR, second staircase, additional issues like open space deficiencies. The committee has recommended that it should be slashed by half across the board for all these premiums and not only for the city but for the entire state.
Shiv Sena leader and civic Standing Committee Chairperson Yashwant Jadhav sought clarification from the BMC on the implications if the waiver on premiums is given and the revenue hit that the BMC will have to take for it.
Jadhav has suggested that the waiver must only be given to builders who make affordable homes and are working in Slum Rehabilitation Authority (SRA) and Mhada redevelopment projects. “It is important to understand which project shall benefit from this. If a said project is a premium project where flats are sold anywhere above Rs 3 crore, then the builder must not get any benefit. It could be considered to make these benefits applicable to developers constructing only 1- and 2-BHK flats. This scheme should be available to builders who are developing affordable housing like in the SRA and Mhada redevelopment projects.
It is important to strictly ensure that these benefits provided to builders ultimately translate to benefit for the end user,” Jadhav had said in his letter to Chahal. Jadhav said that if the cut was implemented, then if builders construct buildings and don’t apply for an OC, or if there is a violation in construction, then the BMC would face loss of revenue.
Samajwadi Party (SP) MLA and corporator Rais Shaikh too had said that the reduction in premiums will hit the BMC’s revenues which is already facing a cash crunch. “There are many cases where builders are under litigation due to non deliverance of the projects in spite of having received payment from buyers. So all these things will have to be discussed in detail. A blanket reduction in premiums will not be fair,” Shaikh said. The BJP too has opposed the recommendations made by the committee.
BJP corporator Prabhakar Shinde has also written to Chahal raising questions on the BMC’s loss of revenue.