You may soon have to pay more tax on property purchases in Bangalore if the city corporation has its way.
The Bruhat Bengaluru Mahanagara Palike, or BBMP, is likely to hike property tax rates to drum up its tax collections for the current fiscal year, and hopes to mop up Rs 880 crore of its total expected collection of Rs 2,000 crore from this avenue.
A 2008 proposal by the BBMP calling for a 15-30 per cent hike in tax every three years - which would have led to a hike in 2011 - had been deferred and the new tax rates will now be effective from April 1 this year. Rates were last hiked in 2008.
Builders say the tax hike may have a short-term impact on sales since buyers may need more time to arrange for funds.
"Developers will initially see a bit of a cold attitude from buyers, because everybody has to plan finances at the end of the day. But, I think, expectations are that over a period of 4-5 years, everybody would get used to it," Jackbastian K. Nazareth, group CEO of Puravankara, said.
Property tax collections are a major source of revenue for the BBMP, which is on an overdrive to collect pending dues.
"Ideally, property tax needs to be paid. Anybody who owns a property has to pay this charge. The duty on property tax...without which the civic authorities will not have money to maintain the common facilities like roads and pavements and street-lighting and garbage disposal. Every citizen has to be conscious about it," said Irfan Razaak, chairman and managing director of Prestige Group, a Bangalore-based real estate firm.
The tax revision is facing resistance from local corporators, who say the hike should be on hold till the state elections get over in May. The BBMP, however, argues that the hike was imminent, especially since the last revision was way back in 2008.
The corporation's standing committee on taxation and finance is likely to take a final decision on the hike before March 31.