Bangalore: For long, many property owners in Bangalore have taken advantage of the self-assessment scheme in order to evade taxes. But not anymore, the Bruhat Bengaluru Mahanagar Palike is adopting a new technology called the total station survey method to calculate property dimensions. Being an electronic device they expect very little room for miscalculations and can also pull up all those who have under-valued their properties to avoid taxes.
Big Developers Pulled Up
In fact, in its pilot project the civic agency surveyed 10 properties like Bagmane tech park, Leela Palace, Orion Mall and others and understood that many such buildings may have falsely declared their property taxes causing the BBMP losses of over Rs 200 Cr.
“Under Self Assessment Scheme developers have declared lesser measurements to avoid taxes and this has caused huge revenue losses to the BBMP” says MK Gunnashekar, Chairman, Taxing & Finance Standing Committee, BBMP.
The BBMP has now ordered the total station survey to be conducted on 70 tech parks, 40 malls and 500 industries within the BBMP limits. They have also kept a window to make corrections in case one is found guilty of falsely declaring their taxes. The evaders will be given a months’ time to pay the difference and if they don’t comply hefty penalties will be imposed.
But developers are unsure about this new method as they say they have been following the routine for years and it is the BBMP that approves the plans. Some are even questioning why only the bigger developers were targeted when there are many more that do not pay their property taxes.
"It is unfortunate that the BBMP is going after the bigger players, they may be trying to follow the lead by example method assuming that if the bigger players pay up the smaller ones will follow suit,” says Raj Menda, Corporate Chairman, RMZ Corp.
However, he doesn’t believe this method is the most effective.
Need for Property Tax Reforms
At a time when even the economic survey has pointed out that cities like Bengaluru were collecting barely 5 % of its property tax potential, the BBMP is doing its best to get many under the tax bracket. However legal experts believe that bigger tax reforms are needed in order to make Bangalore more tax complaint.
For example, the new method of collecting property tax is based on zoning regulations which in turn depends on the guidance value of the area. Advocate Beena Pillai points out that “there are flaws in the guidance values itself hence calculating the right property tax value will have issues”. Pulling up big developers to set an example could be a method the BBMP uses to get more under its tax net, but how effective will this be, remains to be seen.