Betterment tax likely to be re-introduced

BDA proposes levy on development schemes this fiscal

Betterment tax is an one-time levy on the increase in the market value of properties after implementation of the project.

The Authority has sent a proposal to the government proposing to impose up to a third of the increased value of the properties -- before and after completion of the project -- as betterment tax. The BDA Act empowers the Authority to assess the betterment tax to be imposed on properties.

For instance, if the BDA forms a new residential layout, owners of plots falling under the denotified areas of the layout will have to pay betterment tax for reaping the benefit of the development.

HC directive

Likewise, betterment tax can be imposed on properties considered part of any of the BDA’s schemes and projects. The BDA, however, has not yet decided whether to impose the tax only with respect to residential layout projects or to cover all its development projects.

The Authority was imposing betterment tax on development projects till February 2010, when in a judgment the High Court of Karnataka struck down imposition of the tax at Rs 30 per sq ft as arbitrary. It asked the BDA to follow proper procedure in exercising its powers to impose the tax and directed the government to come out with a comprehensive policy on the issue.

The BDA expects to mobilise Rs 25 crore in the current fiscal through betterment tax. Previous attempts of the Authority to mobilise resources came a cropper. It could raise only Rs 150 crore against the target of Rs 1,100 crore through auction of sites in 2010-11. Paucity of funds prevented the city body from taking up many of the major infrastructure projects in Bangalore.

BDA Commissioner Bharat Lal Meena said the Authority will follow all procedures as directed by the Court. “The Court has asked us to notify well in advance the areas where the tax will be levied and inform people on the amount of tax. We will begin imposing the tax as soon as the government gives the approval,” he stated.

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