In order to fund the plentiful amenities provided for the general public by the Government of India, different types of taxes are imposed. Central government taxes are imposed, whereas state government taxes are imposed on property. It can be a time-consuming and complicated process to calculate property taxes. By following a step-by-step process, you will gain a better understanding of the process.
How does a property tax work? Various civic amenities are maintained through a property tax. Among the types of properties subject to property taxes are independent buildings (both residential and commercial), flats and apartments, storage spaces, shops, and vacant land. You must understand the intricacies of property taxes if you own a home or are thinking about buying one.
The purpose of this blog is to simplify the property tax levied by the Bengaluru Municipality called the Bruhat Bengaluru Mahanagara Palike or BBMP and learn about the benefits that you can receive.
Let’s learn more about BBMP’s property tax first.
ABOUT BBMP
Bengaluru’s Municipal body is Bruhat Bengaluru Mahanagara Palike, which collects property taxes from Bengaluru’s property owners every year. In Bengaluru, these funds are used for civic amenities and facilities.
Unit Area Value (UAV) is used to calculate the BBMP property tax amount. Moreover, the UAV is based on expected returns from the property, which depend on two factors: Location and use.
By multiplying the area of the property (in square feet) by the monthly tax rate (measured per square foot), property taxes can be calculated. In turn, this monthly tax rate is determined by the location of the property and multiplied by the current property tax rate. There are six value zones, each with a different tax rate. Standard formulas for computation are as follows:
Property Tax = (G-I) x 20%
Here G = X+Y+Z and I = G x H/100
G= Gross unit area value
X= Tenanted area of property x Per sq. ft. rate of property x 10 months
Y= Self-occupied area of property x Per sq. ft. rate of property x 10 months
Z= Vehicle parking area x Per sq. ft. rate of vehicle parking area x 10 months
H= Percentage of depreciation rate (depends upon the age of the property)
According to the guidelines published by the Department of Stamps and Registration, the jurisdiction of the BBMP is further divided into six value zones. The rate of property tax will vary depending on the zone in which the property is located when it comes to calculating taxes.
BBMP PROPERTY TAX PAYMENT: WHEN TO PAY
Online and manual payments are both accepted for BBMP property taxes. The most important thing is to pay your property tax on time in order to avoid penalties.
Property taxes are due over a standard financial year. For example, FY 2019-20 runs from April 1, 2019 to March 31, 2020. It is required to pay the tax by 30th April of the following financial year.
If you pay your property tax in one instalment and within the due date stipulated by the municipality, you will receive a 5% rebate.
When property taxes are not paid on time, an interest charge of 2% per month or 24% per year is imposed.
Two instalments of property tax can be paid without attracting interest or rebates.