New taxes to be levied to set up Urban Transport Fund

Creating the fund is a pre-condition of the Centre to fund the metro corridor between Central Silk Board and KIA via Outer Ring road

The state government is preparing to announce additional taxes and levies as part of its attempt to set up the Urban Transport Fund.

Creating the fund is a pre-condition of the Centre to fund the metro corridor between Central Silk Board and Kempegowda International Airport (KIA) via the Outer Ring Road (ORR).

Government sources said the Urban Development Department had proposed to introduce up to 1 per cent tax on the guidance value and a cess on some residential property and a cess over the recently announced 2 per cent cess on property tax in the city.

“The chief minister, however, did not approve the idea and advised the department to reduce the percentage of taxes and levies. There was a fear that it will burden the builders who will pass it on to the property buyers, disincentivising the sector. The department has proposed a new set of taxes for residential, commercial and industrial areas. The draft notification will be issued within a week,” the source said.

To a question, Additional Chief Secretary and Bangalore Metro Rail Corporation Limited (BMRCL) managing director to UDD Rakesh Singh said the tax may be as low as 0.2 per cent of the guidance value.

“The taxation will be nominal in the sense that it will serve to establish a new regime. We will wait for the pandemic to pass before increasing the taxes,” he said.

Six months ago, the state government proposed hiking property tax in cities other than Bengaluru. The department’s taxation is part of the measures to comply with the Centre’s rules.

The order sanctioning the approval for the Silk Board-KIA corridor requires the government to set up a ‘Dedicated Urban Transport Fund’ at the state level as well as at the city/metropolitan area level.

Dedicated taxes/levies, betterment fee, development charges and higher floor area ration in the metro station influence zone are some of the instruments mentioned by the Centre.

“The amount realised from the increased land and property value capture from the sale/rental proceeds would be credited to the dedicated Urban Transport Fund,” it said.

Centre extends deadline for airport metro

The Union government, which issued the sanction order approving the 58.19-km metro corridor on Monday, extended the deadline from three years and nine months to five years from the date of sanction in view of the pandemic.

The corridor, comprising two lines Phase 2A (Silk Board-KR Puram) and 2B (Kasturinagar-KIA), has been estimated at Rs 14,788.10 crore. The Centre said that no increase in the approved estimated cost of the project will be allowed in view of the extended deadline.

The order also said that the state should bear the additional costs resulting from rising prices or exchange rate resulting in increased project cost or inclusion of any item not referred to in the detailed project report and other reasons.