Introduction
Property tax in Bengaluru is set to rise sharply after local municipal corporation Brihat Bengaluru Mahanagara Palike (BBMP) proposed value-based tax collection. Experts claim that the proposal will add to the already rising apartment rents.
Table of Contents
- What are the New Draft Changes?
- Property Prices Increased, Experts Say
- Homebuyers Have Written to the State Government
According to the new draft notification, property taxes will be collected based on circle rates in those areas. Earlier, the municipality used to collect property tax based on area-wise zonal classification (AE-E).
What are the New Draft Changes?
Among the major changes proposed in the draft notification are owners of rental properties, who will have to pay double the tax compared to self-occupied properties. The new tax rates are set at 0.2 percent of the guideline values for rented properties and 0.1 percent of the guideline values for self-occupied ones.
Experts say it will also lead to an increase in rents in some parts of the city. Bangalore in particular is facing a rent crisis.
In October last year, the state government raised the guidance values to an average of 25–30 percent. With the new proposal, employers will have to pay more taxes than they do today, they said. The move is aimed at bridging the gap between guideline values and actual property prices.
Property Prices Increased, Experts Say
However, the guideline values increased in the last year. In some areas of the city’s outskirts, property prices have become more affordable. Guidance values have become higher than actual property prices, experts say.
“Another major impact could be an increase in the amount of property tax, as many places are selling properties below the guideline value.” Anil Kalgi, president of the Bangalore City Flat Owners Welfare Association, said.
Homebuyers Have Written to the State Government
The Karnataka Home Buyers Forum, an umbrella body for home buyers in the city, has written to the “Bruhat Bengaluru Mahanagara Palike (BBMP)” commissioner seeking changes in the proposed system. KHBF President Dhananjaya Padmanabhachar said that if the property tax is increased by 5 percent every year, property prices and rents will become a financial burden for middle-class home buyers.
In addition, the company has requested the state government consider the carpet area or actual usable space in the property while calculating the taxes, the letter said.
“The Real Estate Regulatory Act (RERA) makes it mandatory to sell flats to flat owners based on carpet area. So, to collect property tax for property ownership, the government should also include these parameters,” he said.
Conclusion
The local municipal corporation, BBMP, has proposed a value-based tax collection system. It increases property tax rates for rental and self-occupied properties. Home buyers have written to the BBMP commissioner and the state government, seeking changes in the proposed system. For more information, visit OpenPlot.
Also Read: Supreme Court Judgment: Property Tax Even on Non-Citizens of India