The Hindu        10.03.2011

Tax hike for residential properties unlikely

Three-year block period comes to an end on March 31

The Bruhat Bangalore Mahanagara Palike (BBMP) is unlikely to hike the tax for residential properties even though the three-year block period comes to an end on March 31.

Highly-placed sources in the BBMP told The Hindu though the proposal to increase property tax rates has been sent to the Standing Committee for Taxation and Finance for approval, most councillors, cutting across party lines, are not in favour.

Recommended hike

The proposal has recommended increase in tax for residential properties by 20 per cent and commercial properties by 25 per cent.

According to Section 108-A (16) of the Karnataka Municipal Corporations Act 1976, the property tax assessed and levied is liable for “revision once in three years by enhancing 15 per cent commencing from the 2008-09 financial year.” The Act states that the BBMP may enhance the property tax up to 30 per cent once in three years and different rates of enhancement may be made to different areas and classes of buildings and lands.

Mandatory but…

Commissioner Siddaiah maintained that it was mandatory to increase the tax rates under the KMC Act. The current rates came into being after the implementation of the SAS in 2008-09. “As per the Act, the rates have to be revised at the end of the three-year block period. We have already sent our proposal to the Standing Committee for Taxation and Finance. After approval by the committee, it will be placed before the BBMP Council.”

Tax rates for commercial properties may be hiked, however. The quantum of hike would be decided at the meeting of the Standing Committee on March 15.

To five years?

Standing Committee chairperson P.N. Sadashiva said that the tax for residential properties may not be hiked anytime soon. “We are considering sending a proposal to the State Government to extend the block period to five years. That would require an amendment in the KMC Act.”

He said that in anticipation of the Government's approval of the BBMP's proposal to increase the block period, the tax rates would not be revised for residential properties. “We will consider all these aspects while deciding whether the tax rates for commercial properties have to be increased,” he added.