February 22, 2024: The Bruhat Bengaluru Mahanagara Palike (BBMP) on February 20, 2024, issued a draft notification proposing a new property tax calculation structure in Bangalore. The draft suggests replacing the existing ‘A, B, C, D, E’ zonal classification system with taxation based on guidance value. This change follows the adoption of the Bruhat Bengaluru Mahanagara Palike (Amendment) Bill, 2024 by the Legislative Assembly, which aims to reduce the penalty on property tax arrears by 50% within Bengaluru city limits.
Previously, property tax in Bangalore was determined based on five zonal classifications, with zones labelled ‘A’ having the highest guidance value bandwidth and ‘E’ the lowest. However, tax slabs varied for residential, industrial, commercial and other properties. Consequently, property owners in ‘A’ zone paid higher taxes compared to those with similar built-up areas in other zones. Under the proposed system, property tax will be calculated by combining two factors: the guidance value of the property and the built-up area.
Although other cities in Karnataka adopted a guidance value-based taxation system under the Karnataka Municipal Corporation (Amendment) Act 2021, this was not implemented in Bangalore, governed by the BBMP Act 2020. However, with recent amendments, BBMP will now adopt the same system. The draft notification has been released, inviting objections from the public, with a shortened objection period of 15 days instead of the usual 30.
According to the draft, property tax rates for residential properties will be 0.2% of the guidance value for tenanted properties, 0.1% for self-occupied properties and 0.025% for fully vacant land. For non-residential or commercial properties, the tax rate will be 0.5% of the guidance value for occupied properties and 0.025% for fully vacant land. This new system is expected to be implemented from the next financial year, starting April 1, 2024.
The cost of the built-up area for residential buildings has been fixed at Rs 1,500 per square foot with a 3% annual depreciation. Additionally, owners of properties with hoardings, telecommunication towers or electronic devices will pay an annual fee of Rs 20,000 in addition to property taxes. Government-built houses for the poor and declared slums will have an annual composite property tax of Rs 300. BBMP will not reduce existing property taxes if the new system results in lower payable taxes. The notification also grants BBMP the authority to increase property tax by 5% annually from April 1, 2025, and any revisions to the guidance value will also apply to property tax.
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Dhwani is a content management expert with over five years of professional experience. She has authored articles spanning diverse domains, including real estate, finance, business, health, taxation, education and more. Holding a Bachelor’s degree in Journalism and Mass Communication, Dhwani’s interests encompass reading and travelling. She is dedicated to staying updated on the latest real estate advancements in India.
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