The Bruhat Bengaluru Mahanagara Palike (BBMP) has been exploring all avenues to improve its financial health. In the 2019-20 budget, it announced that it had written to the State government to release surcharge on stamp duty, pending since 2007-08.
According to Section 140 of the Karnataka Municipal Corporations (KMC) Act, 1976, the surcharge of 2% on the duty imposed under the Karnataka Stamp Act, 1957, on instruments of sale, gift, mortgage, exchange or lease of all immovable property within the limits of a large urban area is payable to the local body. However, for more than a decade, the surcharge has been collected by the government but not released to the BBMP.
In her budget speech, Standing Committee for Taxation and Finance Chairperson S.P. Hemalatha said that the surcharge arrears has been estimated at ₹500 crore.
BBMP Commissioner N. Manjunath Prasad, in his letter to the Principal Secretary, Department of Revenue (Stamps and Registration) in December last, stated that surcharge was not paid even to the seven city municipal councils, one town municipal council and 110 villages that were added to the erstwhile city corporation since 2006-07. He added that the civic body had requested the Department of Stamps and Registrations to release the arrears, given that the BBMP has pending bills amounting to a whopping ₹2,250 crore.
Inspector General of Registrations and Commissioner of Stamps K.V. Thrilok Chandra told The Hindu that the department had released extra surcharge amounting to ₹239.84 crore to the seven CMCs, one TMC and 110 villages collected along with stamp duty between 1994-95 and 2000-01. Following this, audit objections were raised and cases were filed.
“The department has now taken up reconciliation of accounts that had been pending for several years. The exercise is likely to be completed in a month,” he said and added that the department will be able to ascertain the exact amount due to the BBMP only after the accounts are reconciled. “Once the exercise is completed, we will then be able to initiate the process for payment of arrears,” he added.
₹100 crore from service charge
The Bruhat Bengaluru Mahanagara Palike (BBMP) is looking to collecting service charges from educational institutions, excluding those aided by the State government, and central and State government institutions in the city. If all goes as planned, the revenue from this source will amount to ₹100 crore.
A proposal has been sent to the government seeking amendment to Section 110 of the KMC Act, 1976. The section exempts places of worship, charitable institutions, homes for the destitute etc. from payment of property tax. However, it states that it is up to the civic body to collect service charges for providing civic amenities.
Attempts had not been made to collect service charges from central and Sstate government institutions in the city. In fact, this issue had been raised several times by opposition leader Padmanabha Reddy during council meetings.
According to sources, many educational institutions in the city were making use of Section 110 to not pay property tax. “However, these educational institutions have no qualms about collecting huge sums from parents as fees and donations,” the source said.