The Bruhat Bengaluru Mahanagara Palike’s guideline value-based property tax, which is set to take effect on the 1st of April, would impose an additional cost on landlords who have rented out their houses for residential and commercial purposes in the city of Bengaluru.
This significant increase in property tax values is anticipated to raise rents for tenants who are already paying higher prices for renting. The new tax system requires rented out properties to pay twice the property tax as property occupied by owners themselves. Additionally, tariffs have been increased 3-5 times for different commercial structures.
Even though the existing rule mentions seven separate tariffs for rental premises, such as paying for guest accommodations, convention halls, or malls, features such as air conditioning or escalators are not included in the new tax structure.
According to the reports, traders and property owners expect a rise in the yearly BBMP tax of at least 40 percent after the guiding value was increased by 33 percent. Even if the BBMP reduced the property tax hike to 20 percent in its recent notification, owners must pay the difference in the following tax year.
Clement Jayakumar, one of the residents of Mahadevapura, was quoted by Deccan Herald as voicing worry that, despite tripling the levy on rented houses or flats, the BBMP is not providing any additional services.
“The new rule will have a spiraling effect and eventually, the tenants will have to bear the additional cost,” he added.
Meanwhile, senior BBMP officials rejected the increase of tax by several folds. “This is not a new model that we are adopting,” one of the officials clarified. “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 implications of the new system. Overall, we found that the property tax collection will not increase beyond 5 percent. So, there is no need to be concerned,” he added.
According to a public policy professional, the Palike devised zonal classification to calculate property taxes without mapping every street. Rents for rented houses in Bengaluru may be impacted by the property tax structure.
