Own old property? You’ll pay less tax

Own old property? You’ll pay less tax
There is good news for taxpayers. The new SAS system for property tax will be welcomed by owners of old properties. Meanwhile, pending implementation of Sakrama scheme, BBMP has started refunding money collected under it
TIMES NEWS NETWORK

Bangalore: Shivaprasad, owning a house in Jayanagar, paid Rs 10,000 as property tax all these years. But even with the proposed 20% increase in the property tax rates, while his neighbour, owner of a two-year old building is calculating his economics, this 70-year-old pensioner is cool.
For, he stands to gain. His building is more than 25 years old and he ends up paying taxes lesser than what he even paid since the year 2000.
While the state government is looking at a 20% revision in the tax rates under SAS, completely writing off the introduction of the much-debated Capital Value System, the hike will bring cheers to the old properties which will pay less tax or marginal increase in some cases than the newer properties.
“While the proposed 20% is sure to fill BBMP coffers, it will still be a respite to old properties. This formula also shows that those properties at the city centre will pay more taxes and those at the fringes will pay less, which is justified,’’ said BBMP officials who worked out the new tax base. The BBMP is also thinking of suggesting the removal of the 2.5 times cap introduced by the SAS in 2000 as it is being misused by several high-end properties — they are paying low taxes.
On the other hand, the BBMP has cut the 50% tax concessions which were earlier offered to commercial buildings like kalyan mantapas, nursing homes, star hotels, industrial units and cinema theatres.
From the current taxable year, a new category of property will be introduced which will have three sets of buildings — five star hotels, malls and IT complexes. They will not be valued going by the location/zone anymore. These buildings will have separate rates fixed based on the infrastructure provided.
“Since the residential properties will not yield us substantial taxes, we are looking at high-end properties that have been paying low taxes. When SAS was introduced in 2000, the categories of malls and IT buildings were not included in the scheme. The five star hotels were brought under commercial properties which enjoyed a rebate till now,’’ explained the tax pundits. The modified SAS may be rolled out from November and the tax collections for the current year are likely to be opened. The proposal, cleared by the cabinet sub-committee last week, will go before the state cabinet for the final approval.
SOME SAMPLES
A house on a 1,000 sqft plot which is 10 years old (in year 2000) in zone A and is tenanted. The existing SAS rate is Rs 5/sqft 1,000 X 5 = Rs 5,000 For 10 months (under annual rental value, 10 months rent is calculated) - Rs 50,000 Depreciation for 10 years at 15% (Rs 7,500)= Rs 42,500 Property tax at 20% (under the scheme, tax is calculated at 20% for residential properties) — Rs 8,500 Add 34% cess
After increase over the previous rental area, the property shows a marginal hike
Existing rate at Rs 5/sqft — Rs 5,000 With 20% increase — 6,000 For 10 months — Rs 60,000 Depreciation — for 18 years (10 plus 8) at 25% - (Rs 15,000) - Rs 45,000 Property tax at 20% - Rs 9,000 5% for early payment - (Rs 450) - Rs 8,550 Add 34% cess