BBMP proposes new property tax calculation system

BBMP in Bengaluru plans to revamp property tax calculation by eliminating zonal classification, switching to guidance values for fairer taxation.

The Bruhat Bengaluru Mahanagara Palike (BBMP) introduced a draft notification on Tuesday to revamp the property tax calculation structure in Bengaluru, signalling the end of the zonal classification system.

For residential properties, the tax rates include 0.2% of the guidance value for tenanted properties, 0.1% for self-occupied properties, and 0.025% for fully vacant land (HT)

This move follows the recent amendments to BBMP bill, 2020, which was passed in the legislative assembly post budget.

“The elimination of the ‘A B C D E’ zonal classification is in favour of taxation based on property guidance values. The proposed tax rates vary for residential, commercial, industrial, and other properties,” said the draft notification issued in accordance with Section 144 of the BBMP Act, 2020.

While other cities adopted a taxation system based on guidance values under Karnataka Municipal Corporation (Amendment) Act, 2021, Bengaluru, governed by BBMP Act 2020, had not implemented this system.

“However, with the recent amendments, BBMP will align with other cities. The new system is proposed for implementation in the next financial year,” said BBMP chief commissioner, Tushar Giri Nath.

Previously, property tax in Bengaluru was determined based on five zonal classifications, with ‘A’ zones having higher guidance values and ‘E’ zones having lower values, according to the information available in BBMP.

Highlighting the disparity in old tax calculation system, Nath said, “Property owners in ‘A’ zones paid significantly more tax compared to those with similar properties in other zones. The proposed tax calculation system will solve this issue.”

BBMP officials said, the idea was shared by former corporators too. “Corporators suggested this several times. This new tax calculation system will help small property owners and end discrimination from zonal classifications,” a senior official said.

For residential properties, the tax rates include 0.2% of the guidance value for tenanted properties, 0.1% for self-occupied properties, and 0.025% for fully vacant land. Non-residential or commercial properties will incur a tax rate of 0.5% for occupied properties and 0.025% for vacant land.