78,254 people in Bengaluru had been served notices to pay pending dues and penalties from 2016 onwards, stirring up a row over a zonal reclassification issue.

Bengaluru buildingsREPRESENTATION PHOTO
news Property Tax Friday, January 07, 2022 - 15:47

Thousands of Bengaluru residents were slapped with notices regarding unpaid property tax dues as well as penalties and interest in 2021, leading to protests from several quarters as unpaid dues sometimes ran into thousands and lakhs of rupees. After a cabinet meeting on Thursday, January 6, state Law Minister JC Madhuswamy claimed that there was a fault on both sides and gave residents relief from penalties to rectify the error made.  

Madhuswamy had said that when it was identified that people were paying lesser taxes due to zonal difference, they decided to identify and penalise them. He added 78,254 people had been served notices, of which action was initiated against 11,775 notices.

The notices were sent based on a zonal reclassification in 2016. In that year, the Bruhat Bengaluru Mahanagara Palike (BBMP) introduced a Self-Assessment Scheme for property tax, where citizens can choose their type of property and zone, but due to a reclassification as well as software issue, citizens ended up choosing a former zone where they reportedly invariably ended up paying lesser tax as they had been reclassified into a different zone.

In July-August 2021, people began receiving notices for unpaid property taxes going back to 2016 as arrears had piled up and people got notices for thousands — if not lakhs — in unpaid dues. Notices were sent to pay the tax difference, penalty and interest for four years as the BBMP said that a zonal reclassification was done in 2016-17. This led to protests, as citizens said they did not know that they had been reclassified and that it did not show up on the BBMP portal as well. Following the protests, the BBMP sent a proposal to the state government to waive off the penalty.

Madhuswamy said that the portal should have shown them the zone, but didn’t. “Because of this, it got mixed up and commercial zones paid under domestic and residential, industries paid under residential. For them, we had decided to put a penalty of up to five times and asked them to pay,” he said.

He added that there was a penalty of 2% each month for those who under-declared while self-assessing tax. Claiming that there was a fault on both sides, he said, “We did not display the zones properly and the residents also wrongly underestimated their zonal levels. In a way, we felt it is wrong to penalise people 3-4 years later”

For those who have paid over and above what they owe, it will be adjusted against future property taxes that need to be paid. For those who have paid less than what they owe, they will pay a simple rate of bank interest of 11-12% annually along with their pending dues.

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