Bengaluru adopts new property tax structure, likely to increase rental burden

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Starting from April 1, Bengaluru is transitioning to a new property tax structure that may impose additional burdens on property owners who rent their premises for residential and commercial purposes. 

Under this system, tenanted properties will be required to pay double the tax amount compared to self-occupied residential properties. 

Commercial buildings, categorized differently, will face a tariff increase ranging from three to five times. Although the current rule includes seven different tariffs for rented properties, amenities like air conditioning or escalators will not influence the new tax structure. 

Property owners and traders anticipate an annual BBMP tax increase of at least 40%, considering the 33% hike in guidance value. Despite BBMP’s claim of limiting the property tax hike to 20%, residents express concerns about the potential impact on tenants, who may bear the brunt of additional costs. 

While the BBMP defends the new system, stating that it has been adopted by many Karnataka cities, mixed views persist, with some suggesting that deviations from sanctioned plans should be incentivized differently. 

Critics argue that zonal classification for tax calculation may lead to errors and significant tax hikes for certain buildings.