The Karnataka Commissioner of Stamps and Inspector General of Registration has announced that a revision of guidance values of property values all over Karnataka is under way. According to him, there is a huge gap between the market value (land value and building value) of properties and the guidance value in major cities of Karnataka. The government proposes to set right this anomaly by increasing the guidance values. It has been reported in the media that the guidance values will be increased by 25-50% and this will result in a corresponding increase in property taxes.
But a hike in the guidance values of existing urban properties will not increase their property tax. Sec. 109A of the Karnataka Municipal Corporations Act, 1976 which governs increase in property tax says:
109A. Enhancement of property tax.- Notwithstanding anything contained in section 108 and 109 the property tax assessed and levied under either provision shall not be assessed each year thereafter but shall stand enhanced by 15 percent once in every three years commencing from the financial year 2005-2006:
Provided that the Municipal Corporation may enhance such property tax upto 30 percent once in three years and different rates of enhancement may be made to different areas and different classes of buildings and lands:
Provided further that the non assessment of property tax under this section during the block period of three years shall not be applicable to a building in respect of which there is any addition, alteration or variation to it.
Provided also that nothing contained in this section shall be deemed to affect the power of State Government to direct an earlier revision of property tax.
It is clear from the wording that property tax is enhanced by 15% in the years 2008, 2011, 2014, 2017, ... It can not be enhanced by any other amount just because property guideline values are enhanced. So the present revision of guideline values will have no effect on existing properties. The only enhancement of the tax is the 15% hike that is due this year.
P.M. Bhat, Mysore Grahakara Parishat