The Bruhat Bengaluru Mahanagara Palike (BBMP) has set itself a target of collecting ₹3,500 crore as property tax from the 19 lakh properties in the city. This ambitious goal was announced on Monday during the presentation of the 2019-20 budget for Bengaluru.

Property tax is the single most important source of revenue for the civic body. To this end, a total station survey of 100 high value revenue generating properties such as commercial complexes, malls, tech parks, and multi-storeyed residential enclaves will be taken up. This is expected to yield ₹400 crore.

However, according to a budget analysis by the Janaagraha Centre for Citizenship and Democracy, a point of concern is the declining collection efficiency of property tax from 75% in 2016-17 to 58% in 2018-19 (See table).

Property tax collections from 2016-17 declined by ₹136 crore in 2017-18, despite a consistent increase in property tax collection estimates. In the current fiscal, the total property tax collection is around ₹1,800 crore (as on February 11, 2019). This may increase marginally by the end of March 2019.

No revision in rates

Citizens will get some relief as property tax rates have not been revised. As per the KMC Act, tax rates have to be revised after every three-year block period. BBMP Commissioner N. Manjunath Prasad had written to the Standing Committee for Taxation and Reforms stating that it was time to make a revision, but this has not been done in view of the Lok Sabha elections that are just around the corner. Property tax rates were last revised in 2015-16.

Service charges

The BBMP has sent a proposal to the government to amend Section 110 of the Karnataka Municipal Corporation Act, 1976 towards collecting service charges in lieu of property tax from schools and colleges in the city, excluding those aided by government. It expects to mop up ₹25 crore from this revenue source. So far, the BBMP has not collected service charge from many Union and State government institutions, but it intends to rectify this by initiating a drive, which it estimates will bring in another ₹75 crore.

With the new advertisement policy and bylaws being adopted in the city, the advertisement tax estimated is ₹41.95 crore. In the 2018-19 fiscal, the BBMP had proposed to collect ₹75.25 crore as advertisement tax. However, by the end of November 2018, only ₹108.24 crore had been collected.

Non-tax revenue

Under the non-tax revenue, the BBMP has estimated ₹400 crore towards pending betterment charges in new zones; ₹175 crore as OFC fees and deposits; ₹50 crore as fees on mobile towers; and ₹841.2 crore as fees and service charges collected by BBMP’s town planning department.

The analysis by Janaagraha has noted significant jump in revenue from fees and fines, contributed by increase in revenue from building regulation fees and trade licences. The fee income has been growing at a healthy rate over the past five years.

As part of financial reforms, BBMP has proposed to adapt the Karnataka Municipal Accounting and Budgeting Rules, 2006 to its requirements. It also plans to implement the Centralised Financial and Accounting System. The civic body has also proposed to release two of the five properties that have been mortgaged. Of the 11 properties mortgaged, it has already got back six.