Bengaluru: Govt may reconsider new property tax system

Bengaluru: Amid concerns that property tax will go up after it is linked to the guidance value, the state government may reconsider its decision to introduce the new system in the forthcoming financial year.

Even though Deputy Chief Minister DK Shivakumar had asserted that the new tax computation method would be “more rational and simple”, the Congress government fears backlash from citizens with the Lok Sabha elections imminent.

Sources told DH that the government is keen to continue with the old system of tax computation which is based on zonal classification (A to E). The guidance value-linked property tax system is likely to be kept on hold, it’s learnt.

The development comes even as the BBMP was racing against time to implement the new system from April 1. Over the past fortnight, the civic body had appointed master trainers to prepare its staff to be war-ready while the software was getting an upgrade.

While the BBMP had insisted that the new system would not lead to any increase in property tax, many citizen groups and political parties opposed the move. The Federation of Karnataka Chambers of Commerce and Industry (FKCCI) and Bruhat Bengaluru Hotels Association were among the organisations that wrote to the government to withdraw the draft notification. 

Not official

The government is yet to make an official announcement on withdrawing guidance value-linked property tax computation system. 

Speaking to reporters on Monday morning, Shivakumar hailed the new system as “simple, rational and fair”. He also announced the government’s plan to drop a provision that empowered the BBMP to increase property tax by 5 per cent every year. The Bengaluru Development minister also decided to slash the cap from 20% to 10% to reduce the burden on property owners who will see an increase in tax as compared to the previous year.

He said the BBMP has conducted a dry run of 18 lakh properties to assess the impact of the new tax computation system. “We have observed that the property tax increase over the 2016 tax will be merely 6.5 per cent. It means less than 1 per cent yearly increase in eight years. In real terms, the tax has been reduced as compared to the 2016 property tax rates under the new system,” he said.

In all likelihood, the implementation of the new system will be deferred by a year.