MARGAO: The Margao Municipal Council (MMC) has introduced a new capital value method for calculating house taxes, resulting in over a 300% hike for new residential and commercial properties.
The transition to this new formula was prompted by a directive from the Directorate of Municipal Administration and formalized through a council resolution on January 3, according to MMC sources. This method significantly increases the tax burden on new property owners. For instance, the annual house tax for a 100sqm residential flat has surged from Rs 2,000 under the previous system to Rs 6,600 under the new capital value method—marking a rise of 225%.
Commercial properties have seen even steeper increases, with the annual tax for a 100sqm commercial space jumping from Rs 2,700 to Rs 12,000—a staggering increase of 342%. Industry analysts have pointed out that such a drastic rise in house tax could jeopardize business viability in the state’s commercial hub.
In this new framework, residential properties will incur a tax of 0.15% of their annual capital value, while commercial properties face a higher rate of 0.25%. The capital value is determined by summing land costs (Rs 20,000/sqm) and construction costs (Rs 23,900/sqm for residential and Rs 27,700/sqm for commercial).
The previous method, utilized since 2018-19, was based on presumed rental income with specific deductions. For residential properties, it calculated monthly rent at Rs 3,000 per 100sqm, applied a yield of 7.5%, allowed a 10% deduction, and taxed the remainder at 10%.
“The new capital value method represents a significant shift, determining tax as a direct percentage of the property’s overall value, which includes land and construction costs. This move from income-based to asset-based taxation will inevitably lead to exorbitant increases that could impact businesses,” commented an industry expert.
Municipal officials have clarified that the new rates will only apply to new residential buildings and commercial spaces. Existing properties will remain under the previous tax system. “The revised calculations will only affect new residential and commercial establishments built after the notification,” stated a senior official.
MMC officials anticipate that the new tax structure will significantly enhance municipal revenue, predicting collection increases of up to 300% from new properties compared to the previous system.
