Bruhat Bengaluru Mahanagara Palike (BBMP) has proposed a guidance value-based tax collection, signaling a sharp rise in property taxes in Bengaluru. This move, experts warn, could further escalate the already soaring apartment rental prices in the city.
Previously, property taxes were collected based on zonal classifications, but under the new proposal, taxes will be based on guidance values or circle rates in respective areas. Notably, owners of rental properties will bear double the tax burden compared to self-occupied properties, with rates set at 0.2 percent and 0.1 percent of guidance values, respectively.
The increase in property taxes comes on the heels of a 25-30 percent hike in guidance values by the state government last October, aimed at aligning them with actual property prices. However, experts highlight discrepancies where guidance values surpass actual property prices, particularly in the outskirts of the city.
BBMP officials defend the move, citing improved tax collection efficiency and system rationalization. The proposal also includes an annual 5 percent tax hike starting from April 1, 2025, drawing concerns from the Karnataka Home Buyers Forum regarding its impact on property prices and rental affordability.
The forum urges the consideration of carpet area, as mandated by the Real Estate Regulatory Act (RERA), in tax calculations. Vishnu Gattupalli from the Bangalore Apartments’ Federation expresses concern over potential 100 percent increases in property tax, particularly in prime areas, questioning the taxation of common areas and facilities within apartments.
As the proposal awaits implementation in the next financial year, stakeholders anticipate further clarity and adjustments to address concerns over affordability and transparency in the taxation framework
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