Serviced apartments now under scanner

Many serviced apartments pay property tax under residential units and only some pay taxes under commercial properties.

Published: 18th April 2012 10:28 PM  |   Last Updated: 16th May 2012 07:36 PM   |  A+A-

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Serviced apartments which have mushroomed all over Bangalore are paying property tax under commercial properties | file picture

BANGALORE: Bruhat Bangalore Mahanagara Palike’s (BBMP) plan to bring serviced apartments under the commercial property tax net has not yielded desired results. The Palike had planned to generate `130 crore as revenue but ended up collecting only `7.5 crore. As a result, the Palike is rushing to complete its dream project — Property Identification Data (PID) — hoping that it will bring serviced apartments and hidden commercial complexes to light, thereby ensuring transparency.

Many serviced apartments, which have mushroomed all over the city, are paying property tax under residential units. Only some genuine serviced apartments are paying taxes under commercial properties.

Last financial year (2011-12), BBMP expected the revenue from property tax collection to  touch `1,500 crore. It also expected a revenue of `130 crore from the serviced apartment sector. “We have around 2,000 plus serviced  apartments in the city. But, only a few are registered as commercial. Their cheating has cost the Palike a loss of `130 crore in revenue. Town Planning Committee should inquire into this issue immediately and should submit a report to Council,” said N R Ramesh, corporator.

However, Town Planning Committee Chairman C K Ramamurthy said his department gets several applications seeking building plan approval.

But then, it is not his duty to verify if people are using the plan for commercial or residential purposes.

He said that the  responsibility to identify it rests with the Taxation and

Finance Committee.

The Taxation and Finance Committee department officials said, “In the IT zone, many serviced apartments are operating out of residential houses. We plan to tax at commercial rate but we do not have exact records on how many are operating. Hence, we recommended implementation of PID,” said G Manjunath Raju, Chairman, Standing Committee for Taxation and Finance. He added, “The PID project will be ready within the next four months.”

BBMP Deputy Commissioner (DC) Ramakanth explained that on implementing PID, the  centralised data collection will not allow anyone to escape the tax net and those found evading taxes over the last few years will be fined heavily.

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