BENGALURU: The rise in guidance values of residential and commercial properties across the city has dismayed real estate developers who are already facing a slump in demand. Though the immediate impact is being felt only in the rise in rates of property tax, developers feel that the government should rethink about revision, especially at a time when prices have skyrocketed in almost every aspect of life.
“There is a need to revise prices to avoid undervaluation of properties, but the revision itself cannot be purely for taxation purposes. This results in artificial increase in prices and hurts genuine property buyers. All this has done is increase the stamp duty on registration, increase property taxes and add more properties into higher zones. I do not think this is the correct approach,” Suresh said.
‘Outside Agency Should Assess’
He also said that an outside agency should have been involved in assessing the value of properties.
“In some cases, they have taken the biggest sale rate and assessed all the adjoining properties on the same rate. No two properties can go at the same rate. Values can differ on road width, size of plot, position and many other things. All this has been done only for record keeping. A third party from outside the state would not have vested interest and would assess it objectively,” Suresh added.
A third party appraising the value is something M D of Shriram Properties Pvt Ltd M Murali agrees to. “A third party involvement is absolutely necessary. Sometimes, the parties here may not have the expertise required to make the assessment. This has basically been an unrealistic increase,” he said.
The Impact of the Hike
Shrinivas Rao, CEO of Asia Pacific region at Vestian Global, however, says the hike has had a large impact on property owners in the suburban areas of zones E and F like Mahadevapura and Bommanahalli.
“An effective 50 per cent increase in property taxes is seen across these areas. Meanwhile, zones A and B, which comprise posh neighbourhoods like MG Road, Koramangala and Jayanagar, will be less affected by the percentage rise in levied taxes,” he said.
Rao said that while committees like Residents’ Welfare Association had voiced suggestions to counteract the impending hike, nobody raised objections to the hike.
“Property tax is one of the vital revenue generating sources for city governing bodies like the BBMP. A dip in the Bruhat Bengaluru Mahanagara Palike’s funds will have a cascading mal-effect on several infrastructure development initiatives like sealing of potholes, widening of roads and waste management. Apart from improving BBMP’s revenue, an increase in property tax will mitigate waning infrastructure issues that currently plague the city,” Rao added.
‘Hike Will Dampen Market Further’
M Murali, M D of Shriram Properties Pvt Ltd, said that the increase is bound to dampen the market further. “Bengaluru is a great place and has good demand. But because of global cues, it is not doing very well. The state government should take steps to bring revenue and this increase is not a good sign. There are many things a steady demand and purchase of property brings like stamp duty, sales tax, service tax, VAT and labour employment. But the spiraling effect of the increase will be difficult to control. The government has to take a different view when it comes to housing,” he said.
Revised Rates in sq/ft
Rs 14,158 Legacy Cataleya, Cunningham Road
Rs 10,312 Coles Road
Rs 12,904 South End Road
Rs 16,504 Avenue Main Road
Rs 12,077 Ballari Main Road (after Hebbal flyover)
Rs 22,380 UB Towers, Vittal Mallya Road
Credits The New Indian Express