Pay on time or be prepared to pay through the nose – Property Taxes

If some of you who own houses or any property in Bangalore have a tendency to delay annual property tax payments, then here is a wake up call. People tend to overlook this payment due to a variety of reasons, including the cumbersome process of payment to not being in Bangalore, or being sheer lazy to the oft repeated “It is just a piece of land, let me pay it when I want to construct something or sell it.” And there is also a general misconception that the eventual payout when we get around to actually doing it will not be much.

But that is clearly not the case, anymore.

Take the case of Ram who purchased a property in 2008 and did not pay property taxes from then, thinking that he can pay at a later date. Recently, he decided to sell his property and the buyer wanted all tax dues cleared till the date of the registration. So when he approached the BBMP to know the tax dues, he got a shocker. The bill was a whooping Rs.1.96 lakhs. However, if he had paid the taxes on time over the years also availing the rebate offered by BBMP for early payment, he would have paid Rs.9500/- on an annual basis summing up to Rs.95,000 over a 10 year period. But now he was forced to shell out Rs.1 lakh penalty which is more than double the actual tax due. How did that happen? It’s simple, he was not aware of the penal rates that are applicable.

Here is a simple ready reckoner for the tax rate applicable on delay. The penalty % you will pay (considering you did not pay from the year mentioned) in addition to the actual taxes is shown below (calculated till Jan 2017).

FY 2008-09: 194%

FY 2009-10: 184%

FY 2010-11: 164%

FY 2011-12: 144%

FY 2012-13: 124%

FY 2013-14: 104%

FY 2014-15: 84%

FY 2015-16: 46%

FY 2016-17: 16%

So does it make any sense to procrastinate? No, not at all!

Further, another popular myth is that property taxes have to be paid at the end of each year, whereas the fact is that they need to be paid at the beginning of each year. BBMP provides a rebate of 5% or suitable rate as may be amended on the tax amount to those who pay taxes on time, in the month of April at the beginning of FY. From thereon, one is penalised with a compounded penal charge (calculated at 2% every month) for every month of delay. But, yes there is a provision for one to pay taxes in 2 parts (one in Apr. and the other in Oct. for that FY).

So be smart and pay your property taxes on time to ensure it doesn’t cost you an arm and a leg later.

Expert Opinion: Mr. P Sunder, CEO |TTK Property Services Pvt. Ltd.

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