Bengaluru's new property tax system is unlikely to proceed as anticipated

Proposed system simplifies taxation by consolidating it into 6 categories

Property tax calculations will involve assigning a percentage of guidance value

Amidst the dual challenges of a water crisis and impending elections, the rollout of Bengaluru’s new property tax system is unlikely to proceed as anticipated. The planned shift, which aimed to base tax assessments on guidance values, is now expected to be delayed until the fiscal year 2025–26.

Deputy CM DK Shivakumar’s previous announcement of the system’s launch on April 1st has encountered obstacles, primarily due to concerns about its potential impact on voter sentiment. These concerns have been exacerbated by the looming Lok Sabha elections and the critical issue of water scarcity in Bengaluru.

In response to these challenges, the BBMP (Bruhat Bengaluru Mahanagara Palike) plans to extend the timeline for public understanding of the new tax structure and subsequently educate citizens about its advantages.

The current property tax framework, established in 2008, encompasses 18 categories spread across six zones, with tax rates determined by the prevailing rental values. However, the complexity of this system has led to inaccuracies in tax declarations and financial losses for the BBMP.

The BBMP has highlighted the discrepancies stemming from fluctuating guidance values, underscoring the necessity for reform. The proposed system aims to simplify taxation by consolidating it into six categories: residential, commercial, industrial, star hotels, exempted properties, and vacant lands.

In the new system, property tax calculations will involve assigning a percentage of the guidance value based on factors such as property size, built-up area, and usage.