Definition of Capital Value System

• The capital value system calculates property tax based on the market value of the property.
  
• It reflects the current worth of the land and building combined.
  
• This method replaces older systems like annual rental value in many cities.
  
• It aligns taxation with real estate prices and urban development trends.
  
• The capital value is fixed and periodically revised by the municipal authority.
  

Key Elements of Capital Valuation

• Location and classification of the property zone influence the base rate.
  
• Property type such as residential, commercial, or industrial affects the multiplier.
  
• Land area, built-up space, and usage category are considered in calculations.
  
• Floor space index (FSI) and building age may modify the capital value.
  
• Guidance value or ready reckoner rates issued by the government are used.
  

Calculation of Property Tax under Capital Value System

• Property tax is a fixed percentage of the capital value of the property.
  
• The municipal body publishes rates and multipliers for different zones.
  
• Example formula: Property Tax = Capital Value × Tax Rate × Usage Factor.
  
• Tax is recalculated when there is construction, renovation, or ownership change.
  
• The final amount is adjusted for any rebates or applicable surcharges.
  

Cities Using Capital Value System

• Mumbai and Navi Mumbai follow the capital value-based property tax system.
  
• Other metropolitan cities are gradually adopting this method.
  
• It ensures consistency between market trends and municipal tax revenue.
  
• Cities under smart governance often prefer this approach.
  
• The system is usually backed by GIS-based mapping and digital records.
  

Benefits and Compliance Requirements

• Provides a transparent and uniform taxation structure across localities.
  
• Reduces under-assessment and increases municipal revenue collection.
  
• Encourages property registration at market-aligned rates.
  
• Owners must stay updated with changes in government valuation tables.
  

Disputes related to capital value can be appealed before tax authorities.