Bengaluru Property Tax Update: BBMP Proposes 50% Cut In Property Tax Penalty

Bengaluru Property Tax : The Bruhat Bengaluru Mahanagara Palike (BBMP) has proposed a new property tax assessment method through a draft notification. The BBMP intends to switch to a Guidance Value-Based Property Tax System, replacing the current Unit Area Value system. Under this proposed system, properties in the city center would incur higher taxes compared to those on the outskirts.

BBMP Commissioner Tushar Giri Nath issued the draft notification, inviting objections from affected citizens within 15 days. According to the notification, property tax would be calculated based on the guidance value of the properties. Tenanted properties would be taxed at 0.2% of the guidance value, while self-occupied properties would be taxed at 0.1% of the guidance value. Vacant land would incur a tax of 0.025% of the guidance value.

The notification also specifies that the construction cost per square foot of residential buildings would be Rs. 1500, with building costs depreciated at 3% per annum, up to a maximum of 60%.

Property tax rates would vary depending on the region and size of the property/land, with BBMP's jurisdiction divided into 6 value zones based on the Department of Stamps and Registration's published guidance value.

This decision follows the Karnataka Assembly's approval of a bill reducing the penalty on property tax in Bengaluru city limits by 50%.

Guidance value is the minimum value set by the state government for a specific area, used to estimate stamp duty and registration fees for properties. Last October, the state government increased the guidance value by 15-30%.

Chief Minister Siddaramaiah announced a tax revenue target of Rs. 6,000 crore from the BBMP for 2024-25. The BBMP has also initiated the digitization of property documents to enhance tax collection in the city.