The Aryavarth Express
Agency(Karnataka): According to sources, the Karnataka government is contemplating a pause on the implementation of a new property tax system that links taxes to the guidance value, amidst worries of potential backlash from Bengaluru residents in the lead-up to the Lok Sabha elections. Despite Deputy Chief Minister DK Shivakumar’s endorsement of the system as “more rational and simple,” there’s growing apprehension about the political repercussions of increased property taxes.
The proposed system, set to replace the current zonal classification-based taxation, may be deferred, with the government favoring the continuation of the existing framework. This hesitation emerges as the Bruhat Bengaluru Mahanagara Palike (BBMP) was in the throes of transitioning to the new system by April 1, including staff training and software updates.
Opposition to the new taxation method has been vocal, with various citizen groups and political entities challenging the claim that it would not elevate property tax levels. Influential bodies such as the Federation of Karnataka Chambers of Commerce and Industry (FKCCI) and the Bruhat Bengaluru Hotels Association have petitioned the government to retract the proposed changes.
Despite the absence of a formal government declaration to withdraw the guidance value-linked tax computation, Deputy Chief Minister Shivakumar recently highlighted adjustments intended to alleviate property owners’ burdens. These adjustments include abolishing the BBMP’s authority to increase property taxes by 5% annually and capping tax hikes at 10% versus the previous year’s figures.
Shivakumar also referenced a BBMP “dry run” of 18 lakh properties under the new system, which purportedly resulted in a negligible 6.5% tax increase over 2016 rates, amounting to less than a 1% annual hike over eight years. By these metrics, the Deputy Chief Minister argued that the new system effectively lowers taxes compared to 2016 levels.
As deliberations continue, the likelihood of the new property tax system’s delay gains momentum, with the government possibly postponing its introduction by a year to navigate the sensitive political landscape ahead of elections.
This ongoing debate underscores the complexities of balancing fiscal policies with electoral considerations, especially in a dynamic urban setting like Bengaluru, where property taxes directly impact a significant portion of the electorate.
