BBMP issues draft notification to restructure property tax calculation

In the draft, BBMP has proposed to do away with the ‘A B C D E’ zonal classification and replace it with taxation based on guidance value. However, tax slab varies between residential, commercial, industrial and others 

February 21, 2024 09:53 pm | Updated February 22, 2024 12:02 pm IST - Bengaluru

Earlier, the property tax was calculated based on five zonal classifications, with zones classified as ‘A’ having high guidance value bandwidth and ‘E’ having the least. 

Earlier, the property tax was calculated based on five zonal classifications, with zones classified as ‘A’ having high guidance value bandwidth and ‘E’ having the least.  | Photo Credit: file photo

The Bruhat Bengaluru Mahanagara Palike (BBMP) has issued a draft notification to introduce a new property tax calculation structure in Bengaluru, proposing to do away with the old system of zonal classification. This comes a day after the Legislative Assembly on Tuesday adopted the Bruhat Bengaluru Mahanagara Palike (Amendment) Bill, 2024, which seeks to reduce the penalty on property tax arrears by 50% in Bengaluru city limits.

Earlier, the property tax was calculated based on five zonal classifications, with zones classified as ‘A’ having high guidance value bandwidth and ‘E’ having the least. According to BBMP Chief Commissioner Tushar Giri Nath, this resulted in property owners in A zone paying more tax compared to owners having the same built-up area in other zones.

Although under the Karnataka Municipal Corporation (Amendment) Act 2021, other cities adopted a different taxation system based on the guidance value, this was not introduced in Bengaluru as this city comes under the BBMP Act 2020. However, now with the amendments, the BBMP will also implement the same and the draft notification was released on Tuesday, inviting objections from the public, said Mr. Giri Nath. He said this would be implemented from the next financial year.

In the draft, the BBMP has proposed to do away with the ‘A B C D E’ zonal classification and replace it with taxation based on the guidance value of each property. However, the tax slab varies between residential, commercial, industrial and others.

According to the draft, under residential properties, property tax for tenanted property will be 0.2% of the guidance value; for self-occupied tax, it would be 0.1%; and for fully vacant land, it would be 0.025% of the guidance value.

Under the non-residential or commercial properties, property tax for non-residential property (occupied) will be 0.5% of the guidance value, and for fully vacant land, it will be 0.025%.

Former BBMP councillor from the Congress, Abdul Wajid, told The Hindu this is a fair method of calculating the property tax, and this will end the discrimination that was arising from zonal classification.

N.S. Mukunda of Bengaluru Praja Vedike, one of the first to champion the Self Assessment Scheme for property tax in 2002, said the new proposed scheme for property tax provided a rationale for calculating tax, removing the classification of zones, which at one level was artificial.

“Given that the state Budget sets a high target of ₹6,000 crore for property tax for 2024-25, the new property tax structure will mostly only mean a hike in taxes. BBMP has also imposed a 20% cap on the rise in property tax, which means the gap between property tax and the guidance value of the property is huge. As citizens, we also need to accept that we need to pay more property tax to strengthen BBMP and reduce its reliance on state and union governments,” he said.

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