Palike puts residents in a tax maze

Palike puts residents in a tax maze
By G Manjusainath, DH News Service, Bangalore:
The Bruhat Bangalore Mahanagara Palike's claim that the property tax under the reintroduced Self-Assessment Scheme would be only about 20 per cent higher than the previous year, might just be an illusion. As some tax analysts have discovered, the hike might be much more than 50 per cent.


Thanks to the Palike’s method of categorising the areas under various zones, the tax burden of many residents would be doubled. According to the analysts, this was due to the categorisation of every lane of the city and placing various lanes of a locality into zones.

Here’s a look at how the zoning of areas will hit the residents. Take for instance, the residents of Malleswaram, which has been categorised under Zones A to E.

Residents of Zone E who were hitherto paying a tax of Rs 1 per unit for an owner-occupied building, will have to pay Rs 1 20 tax per unit after the hike but if the zone has been changed from E to C then the payable amount would be Rs 2.15 per unit.

Similarly, if the zone has been categorised as Zone A then the amount a resident would pay would be Rs 3. In all these cases, if the owner of the property has rented out a building, then the tax paid will be just double of what he is supposed to pay as a owner-occupied building.

Clarification

However, the BBMP has a clarification in its draft notification: “If an area/street that has now been classified has moved to more than higher zone, then such change in zones shall be restricted to the value (rate) of the immediate next higher zone.”

This means that if somebody was categorised previously under Zone E has been put in Zone C, then he may have to pay taxes as per Zone D, which is the ‘immediate next higher zone’.

The confusion, however, is if Zone E has been categorised as Zone A, then the tax paid will be as per Zone D or Zone B. The ultimate outcome is that the 20 per cent hike will not be 20 per cent only, it may even touch 40 to 80 per cent.

Old Zones to New Zones: A comparitive study of the old zones with the new zones reveal that many areas under Zone E are now categorised under D, C, B and A.

Previously, Dr Rajkumar Road in Rajaji Nagar, Rajaram Mohanroy Extension, St Marks Road, Sudheendra Nagar, Rajaji Nagar, Subramanyanagar and Ramaiah Lane were in Zone E. A majority of the lanes in these areas are now under Zone C.

One of the tax analysts, N Chandrashekhar, felt the scheme was not transparent. There was no provision to understand how much a person will have to pay if the tenanted property remains vacant for several months or years.

Terming the tax hike unwarranted at a time when Bangaloreans were hit by recessionary trends, Chandrashekhar demanded a public debate before introducing any change.

He asked the BBMP authorities to make the objections public.

When contacted, a senior BBMP officer said he had received a number of complaints related to the taxation. In majority of the cases, the complaints were related to increase in tax value.