Bengaluru Civic body’s Struggle with Property Tax Defaulters

The Bruhat Bengaluru Mahanagar Palike (BBMP) has been facing issues of tax defaultation for quite some time. Nearly 69 owners are yet to pay property taxes worth more than INR 25 lakh each. The list of tax defaulters include several government and private enterprises. This piece of information was revealed in the Karnataka Legislative Council during the ongoing monsoon session.

Maximum tax defaulters account from the south and east zones of Bengaluru. Payment was defaulted by educational institutes, malls, restaurants, real estate developers and even by the BMTC. BBMP’s attempt to derive these taxes have been unfruitful. Irrespective of sending multiple notices the civic body failed to make any development.  

Some of the companies and projects that are yet to pay bulk taxes are – Abhishek Developers, Suraj Inn Pvt Ltd, Palace Road (Rs 3.50 crore), Subramanya Constructions, Malleshwaram (Rs 11.29 crore), Bannerghatta road (Rs 2.25 crore), Bellandur (Rs 1.34 crore), Salapuria Consultant Ltd, Adarsh Reality and Homes, Adugodi (Rs 62 lakh), Jalahalli Cross (Rs 56.98 lakh), Rockline Mall, Bengaluru Turf Club (Rs 53.87 lakh) and many more. 

Enterprises are either withholding the payment purposely or challenging the taxation structure of the BBMP in courts. Many properties have been confiscated by the civic body for the non-payment of taxes. This is one of the powers BBMP has been endowed with. The interest rate on the property tax was increased from 2 percent to 9 percent by the government body this year.

Among government enterprises, Bengaluru Metropolitan Transport Corporation (BMTC) has defaulted maximum tax payment. Property tax accounts for the major revenue for BBMP. It has an annual budget of INR 10,000 crore. In the last five months, BBMP has collected property tax of Rs 2052 crore. This is Rs 200 crore more than the amount collected last year for the exact time period. As per BBMP, online payment methods and organisation of melas have been impactful in increasing the tax payments.

The last three years has seen a gradual plunge in tax payment. The 2017-2018 figure of Rs 2546 crore had increased to Rs 2685 crore in  2019-2020, and further to Rs 2781 crore in 2020-2021. BBMP expects to collect Rs 3500 crore by the end of the financial year. The figures are however disappointing enough. Several properties have been sealed by the tax collection body to extract piled up property taxes.

Bengaluru’s revenue thrives on real estate. Non-payment of property taxes only leads to the economy to suffer. Evolution of multiple real estate projects and infrastructure would amount to nothing if property taxes are evaded. BBMP is hence, taking strict measures for such tax defaults. About 75000 residential property owners have been handed with notices. Many have been slapped with penalties for non-payment of taxes.

The situation still has to improve. There has to be taken measures and modifications done in the policies. This is the only way to ward off any serious crisis. As of now, BBMP has sought advice from the State government regarding a waiver in the penalty amount. More such policies might help the civic body in dealing with the tax issue.

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