Karnataka government eyes Rs 2,000 crore revenue mop up in tier-2 cities from B khatas, ET RealEstate

October 19, 2023

BENGALURU: Facing a funds crunch and with an eye on opening new avenues of collecting revenue, the government is planning to issue B khatas to owners of illegal properties in tier-2 and tier-3 cities. The move is expected to fetch the government Rs 2,000 crore.

A cabinet sub-committee headed by forest minister Eshwar Khandre, which is exploring ways to up revenue of local bodies, is set to recommend issuing temporary certificates to owners of illegal properties.

The move is not unprecedented as BBMP, the civic agency in Bengaluru, already issues B khatas and collects property tax. “The hitch, however, is that people think their properties have been regularised once the government levies tax on them,” said a senior BBMP official. The Khandre-led committee is scheduled to meet on Thursday and Khandre said they will submit a report to the government soon.

“It is important to ensure a reliable source of revenue for cash-strapped urban local bodies (ULBs) in cities outside Bengaluru,” said Khandre. “A potential revenue source is levying property tax on unauthorised buildings and vacant land.” He said a survey is being conducted to list such illegal properties and some estimates put it at 55 lakh. Taxing illegal properties is seen as plucking ‘low-hanging fruit’ but is welcome for a government that is scrambling to mobilise resources to fund both guarantee schemes and development projects.

In August, the cabinet authorised CM Siddaramaiah to constitute a sub-committee to study the issue and propose recommendations. Siddaramaiah chose Khandre to head the panel considering his experience between 2013 and 2018 as municipal administration minister.

In a similar situation in 2017, BBMP decided to list authorised and unauthorised properties separately and opened two registers. Legal properties — those which have all acquired all approvals — were listed in the first register called A khata.

Others that for instance flouted building bylaws, or encroached on public land etc., were included in the second register named B khata. But the BBMP official pointed out that the issue, while politically sensitive, is also fraught with other risks. “In the case of Bengaluru, successive governments have come under pressure to meet the demands of citizens to convert B khatas to A,” said the senior BBMP official.

“But the government cannot do it as a case is pending in the Supreme Court.” However, Khandre said the government only aims to collect tax.

“It has nothing to do with regularising properties, and the government will clearly convey this to owners. Regardless of whether they are legal or illegal, all property owners enjoy services and amenities provided by local bodies. So it stands to reason that they all pay for them. Regularising properties is an altogether different issue. B khatas is only a temporary measure.”

To ensure parity, he said the committee is examining a proposal to levy double the quantum of tax on illegal properties than what legal owners pay

  • Published On Oct 19, 2023 at 12:30 PM IST

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