Bengaluru

Property owners vexed by BBMP rule on betterment charges

The confusion stems from the recent notification of the amendment to KTCP Act, 1961 on hiking plan sanction fee, betterment charges and development cess.

The confusion stems from the recent notification of the amendment to KTCP Act, 1961 on hiking plan sanction fee, betterment charges and development cess. | Photo Credit: K MURALI KUMAR

K. Ramkumar sought permission from the civic body in January 2020 for adding a room to his house in Girinagar, which is built on a 40X60 site. He got approval and paid a fee of ₹30,000. However, COVID-19 and the lockdown happened, and he could not go ahead with the plan.

 

On November 11 , he was shocked to receive a notice from the civic body saying that he has to pay betterment fee and development cess, as per a new amendment to the Karnataka Town and Country Planning Act, 1961. The amount comes up to ₹2.19 lakh. Having paid ₹30,000 earlier this year, he was told to pay the remaining ₹1.89 lakh in the next seven days or face legal action.

He is not alone. Several property owners who have already paid betterment charges and development cess to redevelop or renovate their properties are being served notices seeking both charges running into several lakhs.

“I don’t understand this. We had paid betterment charges earlier when our house was built. Then why is the civic body asking us to pay it again? Paying ₹2.19 lakh to add a room to my house is simply unviable,” Mr. Ramkumar said.

The confusion stems from the recent notification of the amendment to KTCP Act, 1961 on hiking plan sanction fee, betterment charges and development cess. The way the notification is worded suggests that property owners need to pay betterment charges not just when they are developing the property for the first time, but also when renovating or redeveloping it, say civic officials.

Bruhat Bengaluru Mahanagara Palike Commissioner N. Manjunath Prasad has written to the Urban Development Department (UDD) seeking clarity on the issue, a copy of which is available with The Hindu . Even as the UDD is yet to clear the air, BBMP officials on the ground have begun serving notices asking property owners to pay the charges for renovation and redevelopment, leading to anxiety and confusion.

As per the new rules, betterment charges are now fixed as a ‘percentage of market value per square metre of the plot’ — 0.5% for residential, 1% for industrial and 1.5% for commercial purposes — and development cess in the range of 0.1 - 0.5% of the market value of the land, unlike before when it was a fixed rate and not linked to the market value of the property. The betterment charges and development cess will likely run into several lakhs of rupees, given it is now a function of the market value of the land.

For instance, if a property owner has built on only a small portion of a large plot and seeks to extend the building, he or she may have to pay betterment charges for the entire plot. The notice issued to Mr. Ramkumar calculates the betterment chargers and the cess for the area of the entire plot and not the built-up area he sought to add. It means that even though owners had paid betterment charges and development cess for the plot while developing the property, they may have to pay it all over again if they are renovating or redeveloping it.

Property consultant K.R. Ramesh said there is no legal provision to collect betterment charges and development cess multiple times for the same plot of land. “This is fleecing property owners and can be legally challenged,” he said, adding the notification was so worded that it was leading to retrospective tax, which is bad in law.

The BBMP Commissioner said, “We are also of the opinion that betterment charges and development cess can be collected from a particular plot only once and not multiple times. Also for renovation or extension of the building on a large plot, it is unlikely we will be able to collect betterment charges for the entire plot. We have sought clarification from UDD on the issue and a reply is awaited.”

He added that the confusion was created by the way the notification was worded, and it would be sorted out soon.


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Printable version | Feb 13, 2022 11:01:08 am | https://www.thehindu.com/news/cities/bangalore/property-owners-vexed-by-bbmp-rule-on-betterment-charges/article33282558.ece