BBMP to hike property tax wef 1st April 2016

After almost seven years, Bruhat Bengaluru Mahanagara Palike (BBMP) is set to hike property tax, that too steeply. The hike will come into effect from April 1 – the new financial year 2016-17 – and is said to be in the range of 20 per cent for residential and 25 per cent for non-residential properties. BBMP has already issued a notification and is waiting for the final nod from the state government.

However, although the hike is said to be in the 20-25 per cent range, the ground level hike impacting the tax payer is almost 50 per cent in case of properties in areas moved to a higher zone classification.

Take this for instance. A property of around 1,449 sq ft which was in the B zone of the BBMP, if rented out, was inviting a property tax levy of 13,942 as per the unit area value of 4.80 per sq ft. But now, the same property if enhanced to A zone and as per the UAV of 6 per sq ft, the property owner will end up paying 20,914 – 6,900 more (almost 50 per cent hike) – as the revised property tax.

The UAV for assessment for residential and non-residential property, respectively, have been classified on the basis of areas or streets into six zones from zone A to F.

An official attached to the revenue department explained that if an area or street that is in a particular classification has moved to a higher zone, then the revised rate of the higher zone will now be levied.

However if an area or street that is now classified has moved to one zone lower, then properties in such area/street shall continue to pay the property tax at the same zone as classified under 2008 notification, and pay property tax at the revised rate applicable to that zone.

One offshoot of this would be that this could encourage people to buy their own v rather than stay in rented houses. The civic body on its part is expecting to get a boost of 1,000 crore in revenues from the property tax hike. During the financial year 2015-16, BBMP collected a total of 1,820 crore through property tax collections.

The new rates for the property tax is been classified on the basis of guidance value released by the state government.

The revenue department officials have completed the zonal regulation process in all the 198 wards. In fact the decision to implement the zonal regulation was taken only after the BBMP (BJP-led elected body from 2010-15) failed to hike property taxes in the past seven years from 2008 (there was administrator rule from 2008-10). Two opportunities were missed to hike property tax then.

Now, exercising the powers conferred by first proviso to sub-section (2) of Section 108 A of the Karnataka Municipal Corporations Act 1976, (Karnataka Act 14 of 1977), BBMP commissioner G Kumar Naik has published the unit area value (UAV) for the categories of properties applicable for the block period 2016-2019.

According to Naik, the sub-section 3 of section 108A of the KMC Act 1975, Property Tax – other than those exempted under Section 110 of the KMC Act – is applicable to all residential and non-residential buildings.

These would also include buildings constructed in violation of bye-laws or are constructed in unauthorised layouts or on revenue lands or from owners of a properties for which occupancy certificates had not been issued or are yet to be issued.

Credits Bangalore Mirror

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