Bengaluru: 2 years of unpaid property tax? Expect 100% penalty, 9% interest

Bengaluru: Bengaluru’s civic body has the authority to impose a penalty equal to the unpaid tax, along with an annual interest of 9 per cent, on property owners who default on tax payments for two consecutive years.

The rule is expected to affect nearly two lakh "chronic" property tax defaulters.

While officials say the rule was introduced to push long-time defaulters to clear their dues, the steep penalty has drawn criticism, with some fearing it might permanently discourage defaulters from settling their arrears.

In a notification issued in March last year, which recently came to light, the government introduced the BBMP (Amendment) Act, 2024. Section 6 of the Act deals with penalties for defaulting on property tax payments.

A clause under this section states that a property owner who does not pay tax by the end of the financial year in which it becomes due shall incur an interest of 15% per annum on the unpaid amount, calculated until the tax is paid.

This applies even to property owners who miss the payment deadline unintentionally.

The penalty for defaulting on tax payments for two consecutive years could significantly burden property owners.

As per the amended Act, the penalty will be equal to the unpaid tax from the second financial year. In addition, the BBMP is empowered to charge an interest of 9% on the outstanding amount.

For example, if the property tax due is Rs 50,000, the owner will have to pay Rs 1 lakh along with a 9 per cent interest. This penalty also applies to existing defaulters who have not paid property tax until April 2024.

Officials say the 100 per cent penalty applies to property owners who have shown no intent to clear their dues despite the introduction of the one-time settlement (OTS) scheme and multiple notices.

'Rule lacks empathy'

Former corporator NR Ramesh criticised the rule, calling it unreasonable and lacking empathy for people already struggling to make ends meet.

"It is high time the government reduced the penalty to make it attractive for defaulters to clear their dues. Such a huge penalty will only push them out of the tax net," he said.

Ramesh also questioned why the BBMP is targeting property owners while failing to enforce rules to recover revenue from optic fibre cable operators, traders, advertisers, and others.

In all likelihood, the matter may come up for discussion in the ongoing assembly session on Wednesday.