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Brihanmumbai Municipal Corporation (BMC) on Thursday formally announced 100 per cent exemption on property tax for flats measuring 500 sq ft carpet area or less.

"Brihanmumbai Municipal Corporation on February 3 announced 100 per cent relief on property tax for flats measuring 500 sq ft of carpet area," Municipal Commissioner I.S. Chahal said during the corporation's Budget for FY23.

In early January, Maharashtra Chief Minister Uddhav Thackeray had said the property tax for the residential units of up to 500 square feet, located within the Mumbai municipal area limits, would be waived.

Stakeholders welcomed the decision.

"...It augurs well for affordable housing and will be a positive move for the common man living in homes sized 500 sq ft or less in Mumbai. It will provide a fillip to new homes construction in the segment," said Niranjan Hiranandani, Vice Chairman of National Real Estate and Development Council (NAREDCO) and MD of Hiranandani Group.

He also said he was looking forward to a scenario where the property tax exemption on similar lines can be extended to other cities in the state.

"The move by the authorities is a welcome and a positive move for affordable housing. It will prove to be favourable for redevelopment and Slum Rehabilitation Authority projects providing homes that are 500 sq ft or less in size," said Bhushan Nemlekar, Director of Sumit Woods.

The move will also enhance the acceptance of smaller size homes such as 1BHKs and studio apartments giving a much needed fillip to the affordable housing segment, he added.

"The decision is likely to benefit the prospective home buyers along with the developers that are focused on affordable housing. The upto 500 sq ft category of homes have seen a larger demand from the first time buyers and the millennials in the last few months and this move will further help to sustain the demand," said Pritam Chivukula, Co-Founder and Director, Tridhaatu Realty.

Besides, it will not only boost the affordable housing segment but will also help to keep up the growth momentum going forward, Chivukula added.