Bengaluru’s property tax conundrum Premium

Bengaluru civic officials seal down shops and demand property tax arrears, causing controversy and allegations of harassment.

As Bengaluru’s civic officials were in the process of sealing down a shop in the neighbourhood of R.T. Nagar in north Bengaluru over alleged property tax evasion, the 50-year-old property owner Shankar T. collapsed in shock. The civic officials, taken aback, returned the keys even as the man was grappling to arrange money to clear the dues and penalty. Although he was running a commercial establishment, he was paying property tax stipulated for a residential property.

Shankar, in his defence, said he had been paying residential property tax as prescribed without fail, as only a small portion of the residential building on the ground floor had been rented to a shop. “Now I have taken loans to pay the civic body. For many years now, nobody had raised any objections, and now all of a sudden they want us to pay arrears, interest on that, and a hefty penalty,” he rued.

In another case, Ramesh Raj, who had rented out his property for a small hotel, is asked to pay ₹3.5 lakh tax with penalty and interest for not paying commercial property tax. He has to pay the commercial property tax for the last five years. The residential property tax is pegged at ₹600, while the commercial is fixed at ₹14,000 per year. “I have now paid half the sum and am now struggling to arrange the money,” he said. 

Commercial properties and residential properties rented out attract a higher property tax than self-occupied residential properties. The cash-strapped city civic body, Bruhat Bengaluru Mahanagara Palike (BBMP), now on a special drive to augment its revenues to reduce its dependence on the State government for grants, has served such demand notices to over 15,000 properties in the city over the last three months.

Many property owners who have received demand notices for arrears, interest, and penalty have been crying foul, alleging harassment by civic officials and pointing out that the civic body was also at fault.

In an election season, a delegation of the opposition Bharatiya Janata Party MLAs and MPs from the city termed the drive “a loot of the people” and demanded that the State government withdraw these notices for a hefty penalty. The BJP has also argued that under Section 144 (15) (8) of the BBMP Act 2020, the civic body cannot levy fines retrospectively.

Following similar petitions by property owners at a public grievance redressal meeting in the city on January 17, Deputy Chief Minister and Bengaluru Development Minister D.K. Shivakumar said the State government was mulling over legal measures to cancel penalties levied on arrears. “The hefty penalty is being levied as per BBMP Act, 2020, which was brought by the BJP. We need to bring an amendment to withdraw these penalty notices. We are thinking along those lines,” he said.