Bengaluru civic body plans to hike property tax by 25%

BENGALURU: Under mounting pressure to undertake new civic projects and faced with few avenues to raise funds, the Bruhat Bengaluru Mahanagara Palike (BBMP) has mooted a 25% hike in property tax in residential areas and 30% in commercial areas. If endorsed by the state government, the rates will come into effect from April 1 next year.

Confirming the proposal, N Manjunatha Prasad, BBMP commissioner told TOI: “Revision of property tax is being done as per the Karnataka Municipal Corporation Act which mandates revision once in three years. I have forwarded a note to the council in this regard.”

The civic agency’s revenue department has prepared a proposal to hike tax and handed it to Prasad.

Palike officials described the proposal as “much required” since the civic agency is struggling to complete ongoing projects or undertake new ones due to paucity of funds. Observers, however, say such a hike is unlikely to go through in an election year.

Tax increase will help BBMP mop up additional Rs 500 crore
The commissioner will send it to the Palike’s standing committee on taxation and finance,” a source said. “Subsequently, the proposal will be discussed in the BBMP council before being forwarded to the state government.”

The proposal, a copy of which is with TOI, envisages a 25% hike in tax for properties that fall in the residential category, and a 30% hike for those in the commercial category. There are about 19 lakh properties in the city of which at least three lakh owners default on payment every year.

Rs 2,000 cr collected this year
This year (2018-19), the Palike only collected Rs 2,000 crore of a target of Rs 3,000 crore. The proposed hike will see the civic agency mop up an additional Rs 500 crore. Property taxes were last revised in 2016.

While tax for residential properties was increased by 20%, it was hiked by 25% for commercial properties. The government ratified the massive hikes because the BBMP did not revise taxes in 2008-09 or 2013-14 as mandated by the Act for political considerations. “This is one of the reasons for BBMP’s financial crisis,” a source said. “Several public properties were pledged in order to raise loans.”

A corporator said: “It is unlikely the government will approve such a huge hike in the run-up to Lok Sabha elections. Either the quantum of hike will be scaled down or it will be delayed till the polls are over.”