Property owners in Margao are facing a steep rise in house tax as the Margao Municipal Council (MMC) implements a new capital value method for calculating property taxes. Under the revised system, taxes on new residential and commercial properties have increased by more than 300 percent, a significant change from the previous rental value-based method that had been in place since 2018-19.
The shift follows a circular issued by the Directorate of Municipal Administration and was formalized through a council resolution dated January 3. The new calculation method assesses property tax as a direct percentage of the total capital value of a property, which includes both land and construction costs, rather than the hypothetical rental income used under the previous system.
For instance, a 100-square-metre residential flat that previously attracted an annual tax of Rs 2,000 will now require a payment of Rs 6,600, reflecting a 225 percent increase. Commercial properties have been affected even more sharply. A 100-square-metre commercial space that was previously taxed at Rs 2,700 per year will now incur a tax of Rs 12,000, representing a 342 percent jump. Residential properties are now taxed at 0.15 percent of their capital value, while commercial properties are subject to 0.25 percent. The capital value calculation considers land at Rs 20,000 per square metre, with construction costs set at Rs 23,900 per square metre for residential units and Rs 27,700 per square metre for commercial buildings.
Officials explained that the rental value method calculated monthly rent hypothetically, applied a 7.5 percent yield, allowed a 10 percent deduction, and taxed the remaining amount at 10 percent. While the old system was income-based, the new approach is asset-based, directly linking tax liability to property value rather than expected earnings.
Municipal authorities have clarified that the new system will only apply to properties constructed after the notification. Existing residential and commercial buildings will continue to be taxed under the rental value method. “The new calculations will be implemented only for new residential buildings and commercial establishments constructed after the notification,” said a senior MMC official.
The change is expected to have a substantial impact on the municipal coffers, with the council projecting a significant boost in revenue from new properties. Sources within the municipal administration stated that the capital value method could generate collections up to three times higher than the previous system for comparable properties.
Industry observers have noted that while the revised method will strengthen civic revenue, the sharp increase could affect business viability, particularly for small commercial establishments. Businesses may face additional financial burdens in the initial years as the new tax rates take effect. Residential property buyers may also experience higher costs, though the limitation to new properties provides some relief to existing homeowners.
The MMC’s move aligns with a broader trend across Indian municipalities to adopt asset-based taxation, which is viewed as more transparent and reflective of market values. By tying property tax to actual asset value, authorities aim to reduce underreporting and ensure a consistent revenue stream for local governance and civic services.
Officials are monitoring the implementation and plan to provide guidance to property owners and developers to ensure smooth adoption of the new system. The council expects the method to streamline tax assessment, reduce disputes over valuations, and improve overall collection efficiency.
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