BBMP Tax Payments

Property tax is a tax paid on property owned by an individual or other legal entity, such as a corporation. Most commonly, property tax is a real estate ad-valorem tax, which can be considered a regressive tax. It is calculated by a local government where the property is located and paid by the owner of the property. The tax is usually based on the value of the owned property, including land. However, many jurisdictions also tax tangible personal property, such as cars and boats.

The amount owners owe in property tax is determined by multiplying the property tax rate by the current market value of the lands in question. Most taxing authorities will recalculate the tax rate annually. Almost all property taxes are levied on real property, which is legally defined and classified by the state apparatus. Real property includes the land, structures, or other fixed buildings.³

Ultimately, property owners are subject to the rates determined by the municipal government. A municipality will hire a tax assessor who assesses the local property. In some areas, the tax assessor may be an elected official. The assessor will assign property taxes to owners based on current fair market values. This value becomes the assessed value for the home.

The payment schedule of property taxes varies by locality. In almost all local property tax codes, there are mechanisms by which the owner can discuss their tax rate with the assessor or formally contest the rate. When property taxes are left unpaid, the taxing authority may assign a lien against the property. Buyers should always complete a full review of outstanding liens before purchasing any property.

• Property owners pay property tax calculated by the local government where the property is located.

• Property tax is based on the value of the property, which can be real estate or—in many jurisdictions—also tangible personal property.

• Improvements in water and sewer use the assessed taxes.

In Bangalore, like in any other part of the country, we do not have an active and reliable real estate market that publishes the rental rates of every street. The published guidance value of the Department of Stamps and Registration is the only objective tool available for making a reasonable classification of zones. Other methods of classification will be too subjective and run the risk of official discretion. The guidance value route is adopted in other Corporation in the
country.

The definition of built up area under Rule (2) (vi) is reproduced: “Built up area” means total area covered by building or high rise buildings above the plinth level, and including all covered area like basement, mezzanine flooring, balcony whether
covered or not; garage area, constructed boundary of swimming pool, fuel storage tanks constructed underground or above the ground, storage of merchandise in open space like timber, granite, bricks etc, stilts meant for parking and telecommunication and other towers and hoardings erected on the surface or top or any other open space of land or building but does not include,-

(a) court yard at the ground level, garden, rocky area, well and well structures, plant, nursery platform around a tree, overhead water tank, fountain, bench with open top and
the like;

(b) drainage, culvert, conduit, catch-pit, gully pit, chamber gutter and the like;

(c) compound or boundary wall, chejja, uncovered staircase, watchman booth/pump house not exceeding three-square meters and sump tank.

Zone classification and rates are the two tools for property taxation. In the year 2008-2009 several areas were treated backward and were classified under F Zone. This classification was
done as per the guidance value prevailing at that point in time. But since the year 2008-2009 there has been developments in these area and obviously the rental/lease rates have gone up several times due to these developments. In the process of re-fixing the zones some streets have shifted from a lower zone to a higher zone and in some cases they have shifted to 2 zones higher. In order to keep the increase incremental, a cap has been provided whereby even if there is a shift to 2 zones or more higher, the shift is restricted to one zone higher only.
Secondly, taxation cannot be made as simple as increasing the denominator by 5-10% of the existing tax. There has to be a prescribed method whereby even unassessed properties or
new building should be able to arrive at the tax payable by them. Secondly, existing taxpayers must also have a method to calculate tax payable after deducting for depreciation available to them and also to enable them to report additions/deletions made to the property. Therefore a uniform process of assessment for all properties during tax revision is necessary to arrive at the
tax payable.