The Aryavarth Express
Agency (Bengaluru): March 4, 2024 – The Bruhat Bengaluru Mahanagara Palike (BBMP) has recently proposed a new property tax system based on guidance value, which has been met with strong opposition from the city’s residents. The draft notification, bearing the number Ch.Comm/JC(R)/PR/3329/2023-24 and dated February 20, 2024, has been deemed highly objectionable and controversial by many.
Residents argue that the proposed tax system is unconstitutional and opposed to law and public policy. They claim that it deviates from the well-established and widely accepted taxation principles and methods that have been followed for a long time and have received public assent.
The term “Guidance Value” is typically used in the context of business and commercial transactions, such as property buying and selling, and is adopted by the Sub-registrar’s Office. Residents argue that this term cannot be used as a yardstick for providing services to the common man in a welfare state.
Moreover, the residents point out that applying the same taxation principles to different types of properties, such as residential, commercial, vacant land, and CA sites, is not appropriate. They highlight that even the Karnataka Stamp Act, 1957, treats different types of transactions differently for tax purposes, with varying stamp duties for sale, lease, mortgage, exchange, gift, release, partition, family settlement, family arrangement, MOU, hypothecation, and wills.
The residents argue that the BBMP’s sudden switch from the age-old and well-accepted method of calculating property tax based on the Annual Rental Value (ARV) or Unit Area Value (UAV) to the proposed guidance value-based system is a barbaric act that is unknown to the corporation’s mode of taxation.
Some residents have even compared the new tax system to the “JAZIYA TAX METHOD,” which they claim is an abstract, harsh, unsound, unscientific, and unreasonable method that considers factors such as the head count of family members and religion for taxation purposes. They argue that this method is uncivilized and unacceptable in law and fact.
In the past, the corporation considered factors such as the property owner’s means to pay tax and other relevant aspects while fixing the ARV or UAV, making the system rational, scientific, and reasonable. The conventional method also provided a rebate on two months’ rent, considering the property owner’s liabilities towards annual repairs and maintenance.
Residents also point out that this is not the right time to introduce a new tax system, given the hardships faced by many due to the COVID-19 pandemic, which has led to the loss of loved ones, ongoing health issues, job losses, and business and professional setbacks. With the spiraling cost of living in Bengaluru, residents argue that the new tax system will only add to their burdens.
Even if the draft notification is assumed to be acceptable, residents argue that the proposed tax rates for various categories of properties, such as residential, non-residential, star hotels, and industrial properties, are excessively high and not user-friendly for the common man.
Under the proposed system, property tax for residential properties and lands would be calculated based on a percentage of the guidance value, ranging from 0.025% for fully vacant land to 0.2% for tenanted properties per square foot per year. For non-residential properties and lands, the rates range from 0.025% for fully vacant land to 0.75% for star hotels per square foot per year.
The draft notification also includes provisions for service charges for properties exempted from property tax, annual composite property tax for hutments and housing for the poor, and property tax on telecommunication towers, hoardings, billboards, and electronic devices affixed on buildings or lands.
Residents argue that the proposed system of calculation is highly excessive and commercial in nature, making it unfriendly to the common man. They are calling upon the BBMP to immediately withhold and withdraw the draft notification and reserve it for reconsideration after another 2-3 years, with necessary modifications.
As the opposition to the proposed guidance value-based property tax system grows, it remains to be seen how the BBMP will respond to the concerns raised by the city’s residents. The issue has sparked a heated debate about the fairness and reasonableness of the proposed taxation method, with many demanding a more equitable and citizen-friendly approach to property tax assessment in Bengaluru.
