Two to Five-Fold Increase in Bengaluru Property Taxes

The new guidance value method of calculation is likely to see a two to five-fold increase in taxes in city. From April next year, property tax and water charges for all types of buildings is set to increase. The Urban Development Department (UDD) has directed the Bruhat Bengaluru Mahanagara Palike (BBMP) to dump the traditional ‘unit area value’ method and adopt the ‘guidance value’ method to calculate property taxes. Experts believe the move is likely to see two to five-fold increase in tax collection. The directive to the civic body comes following a letter from the Ministry of Housing and Urban Affairs (MoHUA) to adopt uniform tax measurement mechanism in all urban local bodies across the state. While corporations in rest of Karnataka have already adopted guidance value linked property tax collection system, the BBMP continues to follow a different method that measures the property tax based on the rental demand. Meanwhile, the UDD assured the MoHUA that the guidance-value linked tax measurement system will be put in place by end of this year. The Centre has also suggested periodic increase in property tax.