Bengaluru: Owners who rented their properties will feel the pinch as the BBMP is going to implement guidance value-based property tax from April 1. As per the new tax system, tenanted properties to pay twice the tax amount given by self-occupied residential properties.
Bengaluru: The Bruhat Bengaluru Mahanagara Palike’s guidance value-based property tax, scheduled to be implemented from April 1, is going to impose an additional burden on property owners who have rented their properties for residential and commercial purposes in Bengaluru city. This major increase in property tax values is likely to further elevate rents for tenants who are already facing higher rental costs. According to the new tax system the tenanted properties to pay twice the tax amount which is given by the self-occupied residential properties, while the tariff is increased 3-5 times for other categories of commercial buildings.
Bengaluru: New Property Tax Structure
The current rule include seven tariffs for rented properties such as paying guest accommodation, convention halls, or malls. However, stuffs like having an air conditioner or escalators do not count on the tax structure.
Traders and property owners are expecting a rise in the yearly BBMP tax by minimum 40 percent since the guidance value has been increased by 33 percent. The BBMP limited the property tax hike to 20 percent in the new notification, the owners still have to pay the difference in the next tax.
Reacting on a case where property taxes for rental buildings are set to increased, Clement Jayakumar, who is a resident of Mahadevapura, said that he is concerned that the BBMP is doubling the tax on rented house and flats and in return it is not offering any extra service.
“The new rule will have a spiraling effect and eventually, the tenants will have to bear the additional cost,” he said.
A Senior BBMP Official Rubbished The Increase Of TheTax By 10-20 Times.
“This is not a new model that we are adopting. Almost all cities in Karnataka have adopted the guidance value-based property tax system. The BBMP did a test run for over six lakh cases to see the implication of the new system. Overall, we found that the property tax collection will not increase beyond 5 per cent. So, there is no need to be concerned,” the official said.
What Public Policy Professional Said
According to a public policy professional, the Palike came up with zonal classification to calculate the property tax without mapping all streets.
“Even now, not all streets are mapped, and this will lead to many errors in the calculation of tax,” said the professional. “There is also a possibility that some buildings may see a huge increase in property tax,” he said.
The property tax structure may affect the rents of the rented properties in Bengaluru.