Much of BBMP's 'poverty' has to do with property tax flaws

Though property tax is the major source of revenue for the Bruhat Bangalore Mahanagara Palike (BBMP), the civic body has done precious little to augment it over the years. Consider this: General verification of properties was last done in 1977 and property tax rates have not been revised for the last 13 years. 

As per information obtained from BBMP, hardly any verification of residential properties and their tax declaration has been done for many decades. Verification of some commercial properties are being done every year randomly, mainly for fulfilling the formality. Moreover, there is no procedure laid down for conducting the verification exercise. This has given room for local tax officials like inspectors and assistant revenue officers to use this provision to their advantage.

Currently, BBMP has identified 16,19,371 properties, including 3.98 lakh non-residential ones. Of this, 15,78,650 are in the tax net. Property tax forms close to 80 per cent of BBMP’s revenue. The BBMP collected Rs 1,323.18 crore property tax in 2013-14 against the target of Rs 2,500 crore. It has again set a target of Rs 2,500 crore for the current year.  

According to Section 108(a) of the Karnataka Municipal Corporation (KMC) Act, BBMP is empowered to verify property declaration of only 10 per cent of the total properties in a year under the Self Assessment System (SAS). The penal provision for the defaulters and those who under assess is very minimal. The BBMP can only impose up to 24 per cent of the annual tax amount as penalty on defaulters.

Result: The BBMP does not have authentic figures as to how many properties are self-occupied and how many are rented out. The civic body has remained a mute spectator to the rampant tax evasions, including under assessment and false declaration. I Ramakant, BBMP Deputy Commissioner (Revenue), admitted that owners of more than 50 per cent of the properties are under assessing tax. False declaration and non-declaration of properties are also common. 

“We have noted during verifications that under assessment cases are over 50 per cent. We have also learnt that owners of more than 10 per cent of the properties have made false declarations. They could be declaring the rented portion of a property as self-occupied and commercial use as residential,” he stated.

Instead of taking action against owners of residential buildings, BBMP is concentrating on big commercial houses. Of the 80,000 commercial properties verified in the last three years, owners of about 45,000 properties were caught for under assessment tax, he said.

The BBMP has not revised property tax rates since 2000. Every time a proposal was put up for revision, elected representatives opposed it. This is despite the KMC Act allowing revision of tax every three years.

This apart, BBMP has been using guidance value of properties fixed in 2000 for calculating tax, sources said.

Ramakant said a provision should be made in the KMC Act for conducting general verification of properties. Special squads should be set up to conduct the verification, besides pooling in personnel from other departments. Once it is done, all taxable properties can be identified and actual tax can be collected. It will end the problem of under assessment and false declaration, he added.