With newly appointed deputy chief minister and Bengaluru city development minister DK Shivakumar hinting at a major property tax hike, several homeowners in the city are bracing to shell out more money.
However, experts pointed out that Bengaluru urgently needs a hike in the property tax due to an outdated system of tax collection and the absence of reassessment of property value for seven years.
Currently, the local municipal body, the Bruhat Bengaluru Mahanagara Palike (BBMP), is considering setting up a digitalised database that will make data transfer between the sub-registrar's office and the BBMP department seamless.
How efficient is the tax collection system?
While property prices in Bengaluru have increased by 30-40 percent over just two years, property tax collection is based on a system that was efficient two decades ago, a senior BBMP revenue official told Moneycontrol.
The owner of a Rs 1 crore apartment in eastern Bengaluru pays Rs 6,000 in property tax. Which is 0.06 percent of the property's market value.
Janaagraha, a civic participation NGO that works with state governments, estimates that property tax is at least 1 percent of the property value in developed economies.
According to data provided by BBMP, the municipal corporation collected about Rs 3,460 crore in FY23, short of the target of Rs 4,189 crore. The municipal body extended the property tax rebate of 5 percent by a month to June 30.
Need to be tech-savvy
Experts said Bengaluru, as the Silicon Valley of India, needs to be more tech-savvy when it comes to property tax collection.
Srikanth Viswanathan, chief executive officer of Janaagraha, said the BBMP had come up with a GIS Enabled Property Tax Information System (GEPTIS) a decade ago that is hugely underutilised. GEPTIS helps the BBMP to map properties within its jurisdiction. All properties in GEPTIS are tagged with unique PIDs (property identifiers) along with associated property tax collection details and dues, if any.
Currently, various local agencies in Bengaluru have their own property identifiers. The Bangalore Electricity Supply Company Ltd. has markers that are different from those used by the BBMP. Experts have suggested that local agencies should be able to use a common database.
“Bengaluru needs to have a ‘one property, one bill, one collector’ system where a unified database containing details of all properties will be accessible to all local bodies,” Viswanathan said.
The local municipal body said it is ready to launch an online digital portal that will automatically capture details from the sub-registrar's office.
“Once the sales deed has been executed, the details will be automatically captured by us, and we will provide a khata (a property document) within a week. The online database will map every property floor-wise, which we don't currently capture, including information about the owner and its status, such as whether it's a rented flat," the BBMP official said.
Aligning tax and guidance value
Currently, BBMP is looking to align property tax rates with the guidance value. Guidance value or the circle rate is the minimum value at which the sale of a property can be registered with the state government. The guidance value is adjusted periodically to reflect the market value.
Today, the BBMP collects property tax based on the 2010-14 guidance value, which does not reflect the current market realities. In Mumbai, local bodies use guidance values of 2019 or later.
"If we align the tax on the local guidance value, the tax payable will be much higher to reflect the market value. However, we are trying to cap the tax increase at 25-30 percent to avoid a burden," the BBMP official added.
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