Mangaluru: MCC’s twin proposals for property tax changes

For the financial year 2024-25, the MCC has proposed to cap property tax increases for existing residential buildings at 20%. In cases where tax hikes have exceeded this threshold, adjustments will be made in the 2025-26 tax collection.

Additionally, the MCC has resolved to reduce the tax rate for vacant land within residential properties from the current 2% to 1%. A formal request has been sent to the state government for approval.

Background on Vacant Land Tax

Previously, vacant plots were exempt from taxes. For instance, a 10-cent plot with a 1,000 sq ft house would only attract tax on the house. However, under revised guidelines, a 2% tax is now imposed on the entire 10-cent area, creating a financial burden for residents. The proposal to reduce this rate to 1% is now awaiting the government’s nod.

Why the Tax Hike?

According to regulations, property tax is adjusted annually, either based on revised guideline values or by a 3% increment if revisions are delayed. Property tax serves as a critical revenue source for urban local bodies. The state government has mandated tax collection in a manner that does not reduce the demand compared to the previous year while ensuring it does not overburden citizens.

Since October 1, 2023, revised market values have been implemented in Mangaluru. These new rates have doubled the tax burden for residential, commercial, non-residential, and vacant properties compared to the previous year.

Impact on 36,000 Properties

Due to the proposed changes, around 36,000 properties will see a reduction in their tax liabilities. For those who have already paid taxes exceeding the 20% cap, adjustments will be made in the next year’s tax calculations, according to Chief Whip Premananda Shetty.

Software Issues Hindering Implementation

Despite changes in the tax structure, MCC’s software has not been updated to reflect them. Unless updated, citizens paying taxes now will not benefit immediately. Officials have clarified that the proposals will be effective only after receiving the government’s approval.

Mayor’s Authority

Self-assessed property tax is being collected in accordance with the revised market value guidelines notified under the Karnataka Municipal Corporations (Amendment) Act, 2021. The Mayor has been empowered to consult with a committee, review the tax slabs to ensure they do not overburden the public, and submit proposals to the government. Accordingly, a meeting chaired by the Mayor was convened, resulting in two key decisions.

“In order to reduce the burden currently faced by the public due to self-assessed property tax, the structure of the tax has been revised. The Corporation has decided to cap property tax at 20%. A resolution has also been made to send a letter to the government to reduce the tax on vacant properties.” – Manoj Kumar, Mayor, Mangaluru City Corporation

“Decisions taken regarding self-assessed property tax in Mangaluru City Corporation need to be brought to the government’s attention. Implementation will proceed once the government grants approval.” – Anand C.L., Commissioner, Mangaluru City Corporation