Bengaluru Offers One-Time Settlement Scheme for Property Tax Evaders

In a significant move to alleviate the burden on property tax defaulters in Bengaluru, the Karnataka government has directed the Bruhat Bengaluru Mahanagara Palike (BBMP) to implement a ‘one-time settlement’ (OTS) scheme. This initiative aims to streamline the collection of outstanding property taxes while providing defaulters with an opportunity to settle their dues with reduced penalties and interest. The scheme is expected to bring a much-needed respite to property owners and boost the BBMP’s revenue collection.

Overview of the One-Time Settlement Scheme

The one-time settlement (OTS) scheme introduced by the BBMP is designed to encourage property owners who have defaulted on their tax payments to clear their dues. Here are the key elements of the scheme:

Inclusion of Penalties and Interest: The OTS scheme requires property owners to pay the pending tax amount along with a reduced penalty and waived interest. This reduction in penalties and interest is a significant incentive for defaulters to settle their outstanding dues.
Specific Penalty Structure: According to the order issued by H S Shivakumar, the under-secretary to the urban development department, a penalty of 25% on the evaded tax will be imposed on residential properties with tiled or sheet roofs (non-RCC), not exceeding 1,000 sq ft, used for personal purposes and having only a ground floor.
Exemptions: There will be no penalty on properties located in slums, government housing facilities for the poor, and houses of less than 300 square feet used for personal purposes in residential properties declared as slums by the Karnataka Slum Development Board or BBMP.

Key Benefits of the Scheme

The OTS scheme offers several advantages for both the BBMP and property owners:

Respite for Property Owners: Property tax defaulters can settle their dues without the heavy burden of accumulated penalties and interest, making it financially easier for them to comply.
Increased Revenue Collection: The BBMP anticipates a significant boost in revenue as defaulters take advantage of the reduced penalties to clear their dues.
Enhanced Compliance: By providing an incentive to clear outstanding taxes, the BBMP aims to improve compliance and bring more properties into the tax net.

Legislative Support

The BBMP (Amendment) Act, 2024, passed by the Legislative Assembly, backs this initiative by cutting penalties for property tax violations in Bengaluru by almost 50%. The amendment stipulates that tax penalties will apply only for a maximum period of five years, and interest will be waived for dues beyond five years.

Deputy Chief Minister and Bengaluru Development Minister D K Shivakumar highlighted the impact of the amendment, stating, “With the passing of this amendment bill, the penalty amounts are reduced and will save Bangaloreans Rs 2,700 crore in penalties. The BBMP will be able to collect penalties worth Rs 1,000 crore.

Important Deadlines

The notification orders for the one-time settlement scheme will be in effect until July 31, 2024. Property owners are encouraged to take advantage of this limited-time offer to clear their dues and avoid future penalties.

The one-time settlement scheme announced by the BBMP provides a timely and beneficial opportunity for property tax defaulters in Bengaluru to clear their dues with reduced financial strain. This initiative not only aids in boosting the BBMP’s revenue but also promotes better compliance among property owners.

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