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The following piece of valuable information was obtained from TNN.

Lok Sabha poll effect: tax slides to Y2K rate

Property Tax Under SAS; 5% Rebate If Paid In Lump Sum

Naheed Ataulla | TNN

Belgaum: The Karnataka government has begun raining goodies keeping the Lok Sabha elections in mind. Bangalore citizens bagged the first hamper — low property tax. It is now to be paid under the revised Self-Assessment Scheme (SAS) but scaled down to the rates that prevailed in 2000. An added bonus is, if the property tax is paid in lump sum, though there is an option to do so in two equal instalments, a rebate of 5% will be given on the tax.
BBMP will start collecting property tax from February 1. The second and final instalment has be paid within 30 days of February 1. The revised property tax, which had envisaged a hike of up to 20%, has been withdrawn..Piloting the Karnataka Municipal Corporations (Amendment) Bill 2009 in the legislative assembly on Thursday, transport minister R Ashok said, “The citizens will pay less tax than what they paid in 2000. Besides the depreciation rate applicable, which depends on the age of the building, it will also bring down the SAS on such properties.’’

Ashok had headed the cabinet sub-committee to revise SAS for BBMP and had come up with the new formula (now withdrawn). He said the BBMP had expected to net Rs 650 crore from the revised SAS. A drop in this figure was not likely as BBMP had increased its base by amalgamating seven CMCs, one TMC and 110 villages. Earlier, these newly added areas paid tax under CVS. Also, new properties and unassessed buildings, which were estimated to be around 3 lakh, would add to the coffers.
Under the SAS scheme, Bangalore is divided into six value zones — A, B, C, D, E, and F for the purpose of tax collection. These value zones are decided on the basis of the guidance values of properties. For instance, zone A will have properties with guidance values of Rs 6,000-7,000 per sqft and zone B will comprise properties with a guidance value of Rs 4,000-5,000 per sqft.

The Congress and JD(S), though happy with the government reverting to the 2000 SAS base, wanted vacant plots and the annual hike of 5% to be dropped, besides referring the Bill to the joint selection committee. When the government declined, they staged a dharna, which was called off post-lunch.

SALIENT FEATURES OF BILL

Taxable annual value of a building, vacant land or both shall be calculated by multiplying the corresponding ‘unit area value’ with total built-up area of a building, vacant land or both for 10 months, minus depreciation as prescribed, depending on building’s age

‘Unit area value’ means an average rate of expected returns from the property per sqft per month, determined    by BBMP on basis of    average market rate

BITE THIS SAS CARROT

With the increase in building depreciation, owners of old properties stand to gain
Bangalore: With the 2000 rates of SAS in force coupled with more flexibility in building depreciation, owners of old properties have much to cheer about when paying their property tax.

As per the BBMP’s estimation, nearly 65% of old properties will actually end up paying 15% to 18% less in property tax compared to what they paid in 2000.
How does this work? The catch here is, while the rates have remained the same as in 2000, the new rules have increased the depreciation. Earlier, the depreciation would start from five years and the maximum bandwidth was 55 years and above. Under the new rules, depreciation can be calculated from the third year and go beyond 60 years.
While this move will see a drastic dip in the revenue from property tax, BBMP officials feel that more residents will end up paying taxes thanks to the reduced rates and consequently, more properties will come under the tax net. “The provision for the BBMP to collect taxes from unauthorised properties and also the removal of the 2.5-times cap will help fill in the coffers,” say officials.

Instead of the 6.5 lakh properties that were yielding revenue, the BBMP will now look at 14 lakh properties that come under Greater Bangalore. The existing A to F zones will remain the same, but hoardings and other new categories of non-residential structures will be taxed.

The cabinet has also reduced the number of properties coming under random scrutiny — from 15% that was suggested by the BBMP to 10%.
The revised depreciation rates in the final rules notified by the government also suggests an increase to 70% (earlier 50% in the draft rules). Four new slabs have also been inserted into the revised depreciation table for properties that are 48 to 60 years old.

WHAT’S BEEN REVISED

Cases selected for random scrutiny — earlier 15%, now fixed at 10%
Provision for revised returns in case of errors The depreciation rate increased to 70% with four new slabs inserted into the table