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Property Tax Collection Trends In Bengaluru: TEAL Report

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A World Bank report estimates the total number of properties in Bangalore to be around 10 Lakh.

Property tax contributes to a major part of Bengaluru Municipal Corporation’s (BBMP) annual budget. Efforts have been made by the municipal administration to widen the tax net as well as improve tax collection efficiency in the city.

But data analyzed by Terra Economics and Analytics Lab shows that total property tax collected as well as the average tax paid have been stagnant over the past three years. 

According to Mr. Rohan Shridhar, Co-founder & COO at TEALL, even among the properties for which tax demand has been issued, the collection efficiency remains suboptimal. He said, “While khata melas is a positive step to increase the efficiency of tax collection, the results of this exercise are yet to be seen. Our data show that tax collection efficiency has marginally increased by 5% points in 2019-2020 compared to 2018-2021. However, this marginal increase is accompanied by a decrease in the total tax due as well. Moreover, the number of properties for which taxes have been paid have been seeing a steady fall.”

Number of properties paying tax in Bangalore

A World Bank report estimates the total number of properties in Bangalore to be around 10 Lakh. More recent reports citing BBMP sources put that number somewhere between 17 to 20 lakh.

The number of properties that have been paying property taxes is around 10 lakh as per data available with TEAL. This suggests that almost half the properties in Bangalore could be outside the tax net.

Even among the properties for which tax demand has been issued, the collection efficiency remains suboptimal. Our data show that tax collection efficiency has marginally increased by 5% points in 2019-2020 compared to 2018-2021.

However, this marginal increase is accompanied by a decrease in the total tax due as well. For instance, in the same period total tax target has decreased to 2231Cr from 2383Cr. We have calculated the total tax target on the basis of tax demand notices created. This varies from the budgeted property tax target which includes various cess and other charges.

Property tax collection at a glance

TEAL data shows tax collection efficiency has increased from 2018 to 2020. 

Year Number of Properties Paying Tax Tax Target Tax Actual Tax Collection Efficiency
2018-2019 892198 2383 Cr 1496 Cr 62%
2019-2020 917654 2378 Cr 1587 Cr 66%
2020-2021 905295 2231 Cr 1510 Cr 67%
2021-2022* 727411 1400 Cr 1079 Cr NA

Source: TEAL data

*Data for 2021-2022 is only till July 2021

BBMP has not been able to close the gap between the total dues (right end on the graph) and the actual tax (left end)collected

Growth of Property Tax Collected between 2018 and 2020

The total tax collected between 2018 and 2021 averages around 1531Cr/year.

This is much less than the total tax due. The growth of annual property tax collected has been stagnant over the same period.

The gap between the total tax due (red line in the graph) and tax collected (teal line) has been widening with tax collection trailing significantly behind tax dues.

BBMP has not raised property tax in the last three years.

Accordingly, we see that the average tax paid remains more or less flat over the same period. A caveat here is that this is the average transaction amount and not the average property tax in Bangalore.

Property holders can pay tax throughout the year and multiple transactions made against the same property can bring down the average transaction amount.

The graph shows three months rolling average of property tax collected between 2018-19 to 2020-21

Wards Paying the Highest Property Tax in 2020-21

Ward Total Tax Paid Tax Efficiency
Shantala Nagar 80.44 Cr 69.83861
Bellanduru 46.75 Cr 70.58%
Dodda Nekkundi 27.35 Cr 72.67%
Sampangiram Nagar 25.49 Cr 71.22%
Thanisandra 25.35 Cr 75.53%
Koramangala 25.28 Cr 72.21%
HSR Layout 25.04 Cr 61.80%
Vasanth Nagar 24.01 Cr 61.22%
New Tippasandara 22.39 Cr 82.68%
Gandhinagar 20.65 Cr 50.37%

Source: TEAL data

Wards with Least Total Outstanding Tax in 2020

Ward Total Tax Paid Tax Efficiency
Maruthi Seva Nagar 15.12 Cr 91.47%
Siddapura 17.16 Cr 87.12%
Marenahalli 32.07 Cr 86.38%
Mahalakshimpuram 33.28 Cr 86.26%
Shivanagara 48.59 Cr 85.89%
Vidyapeeta ward 42.07 Cr 85.48%
Rajamahal Guttahalli 37.38 Cr 84.87%
Hosakerehalli 32.30 Cr 84.68%
Kempapura Agrahara 15.53 Cr 84.68%
Kumaraswamy Layout 57.35 Cr 84.65%

 

Source: TEAL data

ALSO READ: 34% Home Seekers Now Looking To Buy Properties B/W INR 90 Lakh – 2.5 Cr: Survey

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