Taxes are one of the major sources of revenue for the government, which helps them fund various amenities to be provided to the general public of the country. Taxes are levied on various things, such as income tax on income, GST on goods or services, etc.
Certain taxes are governed centrally, certain other taxes are state-specific, and revenues are received by various states for the purpose of funding the State budget. Property tax is one such tax levied by the state government through the local body on real estate, including vacant land year on year basis. This tax is imposed on the owner of the property.
A property tax levy is delegated to various municipalities within the states to ensure efficient and smooth maintenance of civic amenities in various localities, such as maintenance of local roads, drainage, cleanliness in the area, public parks etc. Property tax is governed by the state government and further delegation to various municipalities results in differences in the basis of levy, computation, mode and manner of its payment.
Property that is included for property tax purposes generally includes independent buildings (residential and commercial), Flats and apartments, Shops, Godowns, vacant land, etc. So owning a property has its own complications, and understanding the nuances of property tax is also important for an individual in finance and tax planning as well.
In this article, we will be simplifying property tax levied by the Bengaluru municipality to help our readers understand and plan their Bangalore property tax payments in a better way.
Owners of properties in Bengaluru are liable to pay property tax to the Bengaluru Municipality body called Bruhat Bengaluru Mahanagara Palike (BBMP) every year. The municipal body utilises these funds to provide civic facilities in Bengaluru. The BBMP follows the Unit Area Value (UAV) system for calculating the amount of property tax. The UAV is based on expected returns from the property, depending upon its location and the nature of the usage of the property.
The computation of property tax is done based on the per sq. ft. per month (UNIT) that is fixed based on the location of the property (AREA) and multiplied by the current property tax rate (VALUE). The jurisdiction of the BBMP is divided into six value zones based on the guidance value published by the Department of Stamps and Registration. The property tax rate will differ according to the zone in which the property is located.
In Bangalore, the property tax rate differs for tenanted and self-occupied properties. The property tax rates for six zones are as follows:
|Zone||Tenanted (per sq. ft.)||Self-occupied (per sq. ft.)|
|Property tax (K) = (G – I)*20% + Cess (24% of property tax)|
G = Gross unit area value arrived by X+Y+Z and I = G*H/100
X = Tenanted area of property x Per sq. ft. rate of property x 10 months
Y = Self-occupied area of property x Per sq. ft. rate of property x 10 months
Z = Vehicle parking area x Per sq. ft. rate of vehicle parking area x 10 months
H = Percentage of depreciation rate, which depends upon the age of the property
Hence, property tax is equal to 20% of the total area of the property (tenanted, self-occupied, and vehicle parking area) multiplied by per sq. ft. rate fixed by BBMP for each kind of usage of property for 10 months reduced by depreciation allowed by BBMP plus 24% cess on property tax.
Please note that depreciation can be claimed once in the block period. No additional depreciation can be claimed for the year 2017-18 and 2018-19 and 2019-2020, if already claimed in 2016-17 as it can be claimed only once in a block period (i.e., 2016-17 to 2019-20)
The Frequently Asked Questions (FAQs) on BBMP property tax help in understanding detailed technicalities in computing X, Y and Z values above.
Anyone paying BBMP tax either manually or online needs to use the following 6 forms:
|Form I||Property with Property Identification Number (unique PID assigned to each property which is a combination of your ward number, street number and plot number) and this can be found on the last property tax payment receipt.||These are properties in the erstwhile BBMP area, and the form is printed in white colour.|
|Form II||Property without PID but only Khata number (number of the khatha certificate that is issued for each property and contains all the details relevant to that property).||These are properties in erstwhile CMC (City Municipal Corporation) and TMC (Town Municipal Corporation) and 110 villages that have been newly added to BBMP. The form is printed in pink colour.|
|Form III||Property without PID or Khata number||These are unlawful/ unauthorised properties built without the sanction of local planning authorities, and the form is printed in green colour.|
|Form IV||When there is no change in the property details, such as the extent of built-up area, usage or its occupancy, etc||Form is printed in white colour|
|Form V||When there is a change in the property, including when the property changes from residential to non-residential||Form is printed in blue colour|
|Form VI||For the payment of service charges when the property is exempt from payment of property tax|
The following banks also have been authorised to collect the tax:
The BBMP has also tied up with the following banks for property tax payments:
If you have chosen challan payment while filling the form online, you can pay the tax at any of the above centers or banks.
Property tax paid can be deducted from the Gross Annual Value (GAV) of the property while computing income under house property in the FY in which it is paid if the following conditions are satisfied:
You can check the status of the BBMP tax paid application after making the payment of the BBMP property tax online. Follow the below process to check the BBMP tax payment status:
Follow the below process to download the BBMP property tax receipt:
The following properties are covered under the ambit of BBMP property tax:
Yes, you can claim the benefit of property tax paid on actual payment, and there is no restriction as to which year the property tax is related to.
No, there is no limit as to the amount of property tax to be claimed as a deduction.
No, the property tax paid on the self-occupied property cant be claimed as a deduction from house property income.