Schools, hospitals in new property tax net

BANGALORE: A new tax rule is on the cards for the city's unaided schools and colleges, private hospitals and choultries. If BBMP has its way, these institutions will have to start paying compulsory property tax with a higher slab, instead of the present 25 per cent service charge.
This is one of the two important resolutions likely to be passed in the BBMP council during its special subject meeting on Wednesday.The proposal has already got the nod of BBMP's tax and finance committee. "We are keen on this new rule as these properties also have a commercial tag. The new tax slab for these properties will fall somewhere between those for residential and commercial properties across all zones. It is estimated to be Rs 3 to 5 per unit area," a committee member told TOI.
Broadly speaking, all educational institutions in the city are exempted from property tax. But revised rules under self assessment scheme (SAS) 2008 mandate that these properties pay 25% of the tax amount as service charges to the corporation considering that they also use the civic amentities provided. The new tax rule, if implemented, will help the Palike gain additional tax revenue of Rs 50 to 60 crore every year.
Once passed by the council, the proposal will be sent to the state government for approval. The rule will also need an amendment to the existing SAS rulebook.
LOOKING BACK
The service charge instead of property tax is a recent rule in Bangalore. It was included under the Karnataka Municipal Corporation (KMC) Act in 2002 for all municipalities across the state that followed the capital value system (CVS). Bangalore being the only city with SAS then had to keep this on hold considering the different system. Category 16 under revised SAS 2008 finally brought the rule into effect. According to this, all educational institutions must calculate the regular tax rate and pay only 25% of the total amount as service charge to BBMP.
ADVERTISEMENT TAX
BBMP's advertising tax is likely to be scrapped soon. Instead, the Palike is now keen on replacing it with an auction procedure. This will be another crucial subject to be passed by the council this week. The exact procedure for it is being planned. It is estimated that the new rule will help the fund-hit corporation gain three times its present revenue from advertisement tax.