Bengaluru residents are bracing for a significant hike in property tax, as the local municipal corporation, Bruhat Bengaluru Mahanagara Palike (BBMP), plans to introduce guidance value-based tax collection. This move is expected to further drive up apartment rents in the already pricey city, experts warn.
Under the new draft notification, property tax will be calculated based on the guidance value or circle rates set by the government. Previously, taxes were levied based on zonal classification (A-E) of areas.
What’s Changing?
One major change proposed is that owners of rental properties will have to pay double the tax compared to self-occupied properties. The new rates will be set at 0.2 percent of the guidance values for rented properties and 0.1 percent for self-occupied ones.
Experts anticipate that this could escalate rents in certain areas, particularly amidst an ongoing rental crisis in Bengaluru where rents are already soaring.
Moreover, following last year’s increase in guidance values by the state government (averaging 25-30 percent), experts note that some outskirts of the city now have guidance values surpassing actual property prices.
Anil Kalgi, president of the Bangalore City Flat Owners’ Welfare Association, highlighted concerns about properties being sold below the guidance value, potentially resulting in higher tax burdens.
BBMP officials state that the move aims to streamline tax collection and rationalize the system, with implementation slated for the next financial year.
The proposal also includes an annual 5 percent hike in property tax starting from 2025.
Homebuyers’ Appeal
The Karnataka Home Buyers Forum has urged BBMP to reconsider the proposed system. President Dhananjaya Padmanabhachar expressed concerns about the financial strain on middle-class homebuyers due to annual tax hikes.
The forum also called for considering carpet area, the actual usable space within a property, in tax calculations, in line with Real Estate Regulatory Act (RERA) norms.
Vishnu Gattupalli, General Secretary of Bangalore Apartments’ Federation, raised concerns about potential 100 percent tax increases in prime areas, questioning the lack of corresponding development on the ground level and seeking clarification on additional charges for common areas and facilities.
(Credits: Money control)
Also read: Karnataka Realty Amendment Spurs Concerns over Infrastructure Strain