Mumbai Update: BMC Proposes Halving Late Payment Penalty on Property Tax to 1% Monthly to Support Defaulters

Mumbai: In a move aimed at easing the burden on property tax defaulters and promoting timely payments, the Brihanmumbai Municipal Corporation (BMC) has proposed reducing the late payment penalty from 2% to 1% per month.

Civic officials argue that the existing penalty is excessively high and discourages payments instead of encouraging them. Although the proposal was submitted to the state government in 2022, it remains pending, forcing taxpayers to continue facing steep fines.

Currently, the BMC levies a 2% monthly penalty on delayed property tax payments, which equates to an annual rate of 24%. In the financial year 2024–25 alone, this surcharge generated an additional ₹178 crore for the civic body. However, officials noted that the steep rate has triggered consistent grievances among citizens and contributed to a mounting backlog of unpaid taxes. “The 2% monthly penalty is quite steep, so we submitted a proposal in 2022 to reduce it to 1%,” a senior civic official stated.

The official added that, for many property owners, the accrued penalties have now exceeded their original tax liabilities. “This disproportionate burden discourages defaulters from settling their dues. Although the state cabinet must take the final decision, the proposal has been stuck for the past three years,” he explained.

Despite the challenges, the BMC recorded its highest-ever property tax collection since 2010, amassing ₹6,388 crore in the 2024–25 fiscal year. Yet, the civic body still faces difficulties recovering approximately ₹22,000 crore in outstanding dues accumulated over the past 15 years.

This massive sum also includes ₹550 crore owed by prominent government agencies such as the Maharashtra Housing and Area Development Authority (MHADA) and the Mumbai Metropolitan Region Development Authority (MMRDA). At present, Mumbai has around 10 lakh registered property taxpayers.