The Karnataka cabinet sub-committee has recommended re-introduction of area based property tax system similar to the SAS (Self Assessment Scheme) introduced in the year 2000 for Bangalore Mahanagara Palike (BMP) areas.
Through this revised SAS, BMP plans to collect tax from 1.5 million houses to the tune of Rs 600 crore for the year 2008-09. In 2007-08, the BMP had collected Rs 350 crore as property tax. The cabinet sub-committee, headed by R Ashok, who is also the transport and Bangalore district in-charge minister, which was constituted to implement property tax scheme for BMP areas recently has recommended bringing back SAS.
With this the proposed Capital Value System (CVS), for which an Ordinance was passed during the President’s rule last year, will be put in the cold storage. Addressing reporters after the cabinet sub-committee meet, here today, Ashok, said “We have recommended to the commissioner, BMP to follow this new SAS which favours incremental increase in property tax. The commissioner has inherent powers under the act/rules to make such incremental increase suitable.”
“The sub-committee has also recommended increasing the depreciation table to cover rebate up to 70 per cent by increasing the corresponding number of years. Also we have instructed the commissioner of BMP to recommend that independent dwelling units in the 110 villages coming under its jurisdiction be treated differently and not to tax them excessively,” he added.
There are about 650,000 houses in old areas, 550,000 in new areas (CMC areas which were brought under BMP and 450,000 unauthorised houses in new areas. The average age of houses in the old zones is 25 years and there are about 650,000 houses. The average age of a house is 8 to 10 years in all the five new zones and there are about 550,000 houses.
Arithmetically, if a property shifts to the next higher zone the average increase will be 10 to 12 per cent depending on the age of the building. Zone classification is based on the valuation fixed by the department of stamps and registration.
“Almost all the areas in the new zones fall under F zone and hence the net tax effect is minimal,” said Ashok.
As per the present classification the BMP commissioner has informed that about 55-60 per cent of the properties will remain in the same zone and 25 per cent has shifted to the next higher zone.
About 10 per cent by two zones higher and 1-2 per cent (some street only) to 3 places higher, he added.
The following are the recommendations made by the cabinet sub-committee.
* To keep the gross increase within 20 per cent.
* To remove cap of 2.5 times available under SAS.
* To provide 50 per cent rebate for owner occupied properties.
* To increase coverage by including unlawful buildings without regularisation.
* Not to increase tax on vacant land in F zone.
