Taxation and Legal - Property Tax Calculations For Bangalore

REFERENCE: Property Tax Self-Assessment Scheme (Bangalore Mahanagara Palike) 2000 The Bangalore Mahanagara Palike (BMP) offers its citizens a Self-Assessment System to calculate property tax. The property tax assessment system is based on the Annual Rateable value (ARV). As per section 109(2), ARV of a property is the gross annual rent at which the building or land may reasonably be expected to let from year to year. Section 109(2) (a) (ii) provides the method for assessing property tax, when the gross annual tax cannot be estimated. The new scheme has been evolved on the mass appraisal system of properties. The city of Bangalore has been classified into six zones based on the property valuation done by the Department of Revenue (Registration). Further, the properties have been classified based on cost of construction value at current market rate. The per sq. ft. per month rates applicable are related to the zone and class of building. While rates for rented buildings have been fixed at much lower than prevailing market rates, owner occupied buildings have been given a further concession of 50%. The rates for different classes/zones have been arrived at after factoring several criteria like the location, type of construction, built up area, use of property and the age of the building. Citizens have been given a range of choice to file their statement of property tax at any of the branches of Vijaya Bank and Syndicate Bank, besides the offices of the concerned Asst. Revenue Officer. House Tax / Property Tax It is a specific percentage of the rateable value of lands and buildings. Annual Rateable Value Annual Rateable Value of any land or building assessable to property taxes shall be the annual rent at which such land or building might reasonably be expected to let from year to year.

Residential Property (Examples) 1000 SQ. FT FLAT RESIDENTIAL WITH RCC CONSTRUCTION UNDER 5 YEARS. Self Occupied: Area x RV RV=Rs. 2.50/sq.ft pm (see Annexure I) 1000 sq. ft. X Rs. 2.50 /sq.ft. pm = Rs. 2500 pm (MRV) Rs. 2500 X 10 = Rs. 25000 pa ARV (2 months deduction for maintenance allowance) Rs. 25000 X 0.90 = Rs. 22500 pa ARV (10% depreciation, under 5 years old, see Annexure III) Rs. 22500 X 0.20 = Rs. 4500 pa PT (20% of ARV for residential use) Rs. 4500 X 1.34 = Rs.6030 pa Property Tax (additional cess - 34% of property tax) See Note-1 Total Cess of 34% = 10% education cess + 15% health cess + 3% beggary cess + 6% library cess) Tenant (rental residential): RV = Rs. 5.00 /sq.ft/month (see Annexure I) 1000 sq. ft X Rs. 5.00 /sq.ft.pm = Rs 5000 pm MRV Rs. 5000 X 10 = Rs. 50000 pa ARV ( 2 months deduction for maintenance allowance) Rs. 50000 X 0.90 = Rs. 45000 pa ARV (10% depreciation Annexure III, under 5 years) Rs. 45,000 X 0.2 = Rs. 9000 pa PT (20% of ARV for residential) Rs. 9000 X 1.34 = Rs. 12060 pa Property Tax (additional cess - 34% of property tax ) See Note 1

The following section contains three annexure, two notes and a set of general conditions as shown below. ANNEXURE-I 1. This contains various rates, per sq. foot per month (RV) that the property owner has to use for arriving at Annual Rateable Value (ARV) of the residential properties. The table has six zones from A to F (Column-5) and five property classifications from category I to V (column-I). The rates, per sq. ft. per month, applicable for arriving at the Annual Rateable Value are shown under different zone/category for rented and owner occupied properties, separately. RATES FOR ARRIVING AT THE ANNUAL RATEABLE VALUES FOR ASSESSMENT OF RESIDENTIAL PROPERTY IN BANGALORE CITY. For bringing in uniformity in the matters of assessment of property, the annual gross rent at which the building/land may, at the time of assessment, reasonably be expected to be let from month to month or year to year shall be

calculated as under

ANNEXURE- I (UNIT: PER SQ. FT. / PER MONTH) Description of the Cost of Category property construction (including apartments) I ZONE ZONE ZONE ZONE ZONE A B C D E

USE

ZONE F

MORE THAN RCC/Madras Owner Rs.250/- per 2.50 Terrace Occupied sq.ft. Tenanted 5.00 MORE THAN Rs.150/RCC/Madras Owner BUT LESS 2.00 Terrace Occupied THAN Rs.250 per sq. foot Tenanted 4.00

2 4

1.80 3.60

1.60 3.20

1.40 2.80

1.20 2.40

II

1.75

1.50

1.25

1.00

0.60

3.50 1.50 3.00

3.00 1.25 2.50

2.50 1.00 2.00

2.00 0.80 1.60

1.50 0.60 1.20

III

RCC/Madras Terrace

LESS THAN Rs. 150/per sq.ft.

Owner 1.75 Occupied Tenanted 3.50

IV

TILED AND SHEET OF ALL KINDS

ESTIMATED TO BE LESS Owner 1.50 THAN Rs.150 Occupied Per sq. ft. Tenanted 3.00

1.25

1.00

0.80

0.70

0.50

2.50

2.00

1.60

1.40

1.00

THATCHED Rs. 40/- per sq. ft. per month with a minimum HOUSE/HUT

NOTE-1: HOW TO ARRIVE AT THE RATEABLE VALUE FOR RESIDENTIAL PROPERITES Cost of construction means the cost of the building if constructed at the prevailing market rates. Accordingly, choose the appropriate category at Column 1 and Zone at Column 5. Measure the total built-up area of the property. The built-up area means the total built-up area, which includes covered balcony, all covered areas including the garage area. If the property is a mixed construction, i.e. both RCC and tiled/sheet then measure the area separately and apply the rates appropriate to the category. Multiply the total area with the rateable value specified in column 5 for respective zones listed in Annexure-I. This gives the Monthly Rateable Value (MRV). Multiply MRV by 10 months to arrive at the Annual Rateable Value (ARV). (Two months deduction is given in lieu of all allowance for repair or on any other account whatever.) Assessment of vacant land: If the vacant land exceeds 3 times the built-up area, such land in excess shall be assessed @ 30% of the rate fixed for built-up area of such property. On the ARV, deduct for the age of the building depreciation as per Annexure-III. On the balance ARV, apply tax @ 20% for residential use or 25% for non-residential use to arrive at the property tax payable for the year. To the property tax add 34% of the property tax, towards cess, viz:Educational cess - 10% Health cess. - 15% Beggary cess. - 3% Library cess. - 6% Total 34%

Non-Residential Property (Examples) 1000 SQ. FT non-residential self occupied shop constructed under 5 years old. Self Occupied: RV=Rs. 10.00/sq.ft pm Annexure II 1000 sq. ft X Rs. 10 /sq. ft. pm = Rs.10000 pm MRV Rs. 10000 X 10 = Rs. 100000 pa ARV (2 months deduction for maintenance allowance) Rs. 100000 X 0.90 = Rs. 90000 pa ARV (10% depreciation, under 5 years old, Annexure III) Rs. 900000 X 0.25 = Rs. 22500 pa PT (25% of ARV for non-residential use) Rs. 22500 X 1.34 = Rs. 30150 pa Property Tax (additional cess - 34% of property tax) See Note-2

ANNEXURE-II NON-RESIDENTIAL This contains the details of rates for arriving at the Annual Rateable Value (ARV) for non-residential buildings. All the non-residential buildings have been classified into group A and B. Group 'A' consists of six categories (VI to XI) of buildings and the rate per sq. ft. is based on the zone in which the property is located. As in the case of Annexure-I, here too, rates applicable per sq. ft. per month for respective zones and class of building have been shown separately for rental and owner occupied buildings.

Group B consists of non-residential buildings grouped into five categories (XII to XVI) and the per sq. Ft. rate for these properties is not related to zonal classification, since the value of the type of non-residential properties included in this group is not related to the zone in which they are located. Hence, for 5 types of properties categorized as class XII to XVI, an independent system of assessment unrelated to the zone, but based on certain norms has been evolved. Annexure-II, Group-B contains per sq.ft./per month rate applicable to calculate the ARV.

RATES FOR ARRIVING AT THE ANNUAL RATEABLE VALUES FOR ASSESSMENT OF Non-RESIDENTIAL PROPERTY IN BANGALORE CITY.

UNIT: PER SQ. FT./ PER MONTH Non-Residential Group-A: Category Description of the property (including apartments) All Commercial Complexes, Banks, Offices, Shops and commercial establishments other than those specifically mentioned in other categories in Annexure-VI Cost of construction USE ZONE ZONE ZONE ZONE ZONE ZONE A B C D E F

VI

MORE THAN Rs.250/- per sq.ft.

Owner Occupied

10

Tenanted Hotels, pub bar/restaurant & lodging homes including all clubs/Association where articles of food and/or liquor are served MORE THAN Rs.150/- BUT Owner LESS THAN Occupied Rs.250 per sq. ft. Tenanted Clinics, poly-clinics, diagnostic centers, laboratories, and other health care system/services other than nursing homes & hospital.

20

14

10

VII

10

20

16

12

VIII

LESS THAN Rs. 150/- per sq.ft.

Owner Occupied

Tenanted Exclusive sports centers including gym and physical fitness centers where articles of food and for liquor are not served.

16

14

10

IX

Owner Occupied

1.50

Tenanted

12

10

Student hostel & educational institutions not covered under section 110 of the KMC Act.

Owner Occupied

Tenanted Other kinds of not-residential properties not specifically included under the nonresidential group A or group B mentioned here in after

XI

Owner Occupied

10

Tenanted

20

14

10

Non-Residential Group-B: Category Description of the property XII Rateable Value All Star Hotels, as categorized by the Ministry of Tourism Govt. of Karnataka/ Govt. of India, at the rate of Rs. 15/- per sq. ft., irrespective of the location within the Bangalore Mahanagara Palike. Cinema theaters Category Rate per Sq.ft. Cinema theaters have been classified into 5 categories based on the location, quality of construction, Air-condition, and other facilities provided. For the details of the categories please refer to Annexure-1V A Rs 4 B Rs 3.50 C Rs 3 D Rs 2.50

XIII

E) Touring theaters and semi-permanent theaters irrespective of zones shall pay Rs. 8000/-annually as property tax, payable in two half-yearly installments. Kalyana ManatapShadi Mahal, Kalyana Mantap etc. under this category have been classified into 5 Community hall, Convention groups based on the location, quality of construction facilities provided hall Party Hall etc. let out for all of which determine the charges for letting out the premises. Under marriage, reception, this category, charges for hall include charges for air-conditioning, chairs, meetings or for any function. utensils, vessels, shamiana, electricity, water, fuel, interior or exterior Category decoration and the like but do not include any charges for food and Rate per Sq. ft. drinks. Accordingly where the charges are:More than Between Between Between Rs. Rs.30,000 and Rs.20,000 and Rs.10,000 and Less than Rs. 5000 30,000 Rs 20,001per Rs. 10,001 per Rs. 5,001 per per day per day day day day A Rs. 5 Industrial Buildings (Industrial units as defined by the Director of Industries & Commerce Govt. of Karnataka or Govt. of India) They have been classified as (Rs. /per Sq.ft.) Owner occupied Tenanted a) Large Scale b) Medium Scale c) Small Scale d) Tiny Scale 4 3.50 3 2 8 7 6 4 B Rs. 4.50 C Rs. 4 D Rs. 3.50 E Rs. 3

XIV

XV

e) Public sector Industrial buildings (State Govt. or Central Govt.) Rs. 3/per sq. foot irrespective of the scale of the Industry.

RATEABLE VALUE FOR NON-GOVERNMENT HOSPITALS & NURSING HOMES IN BANGALORE CITY UNIT: RATE PER SQ. FOOT PER MONTH CATEGORY BASED ON BED STRENGTH XVI Year of commencement (Financial year) 2000 & after Between 1990-2000 Between 1980-1989 Prior to 1980 More than 200 A Rs. 6 5 4.50 4 Between 100-199 B Rs. 5 4.50 4 3.00 Less Between Between than 25 50-99 C Rs. 25-49 D Rs. E Rs. 4.50 4 3.50 2.50 4 3.50 3 2 3.50 3 2.50 3.50

NOTE-2: HOW TO ARRIVE AT THE RATEABLE VALUE FOR NON-RESIDENTAL PROPERTIES Measure the total built-up area of the property. The built-up area means the total built-up area, which includes covered balcony and covered areas including the garage area. Under non-residential property, 25% of the total built-up area in Category II & V in Group A and all Categories in Group B shall be considered as utility/ service area and such area shall be assessed to property tax at 50% of the rate prescribed for such property.

Multiply the total area with the rateable value specified for built up area and utility area, separately, for the respective category. This gives the Monthly Rateable Value (MRV). Multiply MRV by 10 months to arrive at the Annual Rateable Value (ARV). (Two months deduction is given in lieu of all allowance for repair or on any other account whatsoever.)

Assessment of vacant land: if the vacant land exceeds 3 times the built-up area, such land in excess shall be assessed @ 10% of the rate fixed for built-up area of such property.

On the ARV, deduct for the age of the building depreciation as per Annexure-III. On the balance ARV, apply tax @ 25% for non-residential use to arrive at the property tax payable for the year. To the property tax add 34% of the property tax, towards cess, viz:Educational cess - 10% Health cess - 15% Beggary cess - 3% Library cess - 6% Total - 34%

It contains the rates of depreciation allowed on buildings according to the age. These rates are applicable to all the 16 classes of properties. The depreciation for Building of the Clause referred to in sub-clause II of class (a) of the proviso to sub -section (2) of section 109 of KMC Act, 1976 shall be as follows:

ANNEXURE III Age of the Building If the age of the Building: 1.Does not exceed Five years 2.Exceeds Five years but does not exceed Ten Years 3.Exceeds Ten years but does not exceed Fifteen years 4.Exceeds Fifteen years but does not exceed Twenty years 5.Exceeds Twenty years but does not exceed Twenty-Five years 6.Exceeds Twenty-Five years but does not exceed Thirty years 7.Exceeds Thirty years but does not exceed Thirty-Five years 8.Exceeds Thirty-Five years but does not exceed Forty-Five years 9.Exceeds Forty years but does not exceed Forty-Five years 10.Exceeds Forty-Five years but does not exceed Fifty years 11.Exceeds Fifty years but does not exceed Fifty-Five years 12.Exceeds Fifty-Five years and above 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 70% Depreciation

This Self-Assessment Scheme came into effect from 01/04/2000 and shall remain in force until 31/03/2005. Annexure IV, V and VI from the Bangalore Mahanagara Palike booklet have not been shown here, due to lack of space, but must be referred to, at all times. Disclaimer: This article is provided only as a guideline for estimating Bangalore property taxes and must be used as such. Refer to the latest updates from the Bangalore Municipal Corporation. For more support and tips, feel free to write to us at: info@bricksandwall.com