ZONING AND REVENUE DEPARTMENT Begur Ward (192)

GROUP MEMBERS: Prathiba B.S Nayan Ranjan Sridevi K.V Mahalakshmi.L Deepak Kumar

ACKNOWLEDGEMENT

Our sincere thanks to all those all those who have supported us in completion of this project We offer our deepest gratitude to the Revenue department, Begur. We are thankful to, Mr.Nagaraju, Assistant Revenue Officer, Begur Mr. Krishnappa, Revenue Inspector, Begur, Mr. Ram Shettigar, Additional Commisioner, Bommanahalli zone Mr.Shiva Basaviah, Joint Commissioner, Bommanahalli zone and other tax inspectors of Begur ward Our sincere thanks to our faculty members Mr.Sudhir Krishnaswamy, Mr.Narayana Gatty and Ms.Manavi Belgaumkar for their constant support and value guidance through the study Also, thankful words of appreciation for the community members of Begur ward who interacted with us as a part of the study. Final word of acknowledgement to Azim Premji University for providing us an opportunity for an insightful study into Begur ward, which helped us, put some of the theory learnt into practice. Group 8 (Zoning and revenue) Deepak Kumar Mahalakshmi.L Nayan Ranjan Kumar Pratibha B.S. Sridevi K.V.

Contents
List of Abbreviations: ................................................................................................................................ 4 Context of study ........................................................................................................................................ 4 Study Methodology: ................................................................................................................................. 5 Outline of the report ................................................................................................................................. 5 INTRODUCTION ............................................................................................................................................. 6 PURPOSE OF THE STUDY: .......................................................................................................................... 6 EXTENDING PERIPHERIES OF THE BANGALORE CITY: ............................................................................... 6 ZONING AND THE REVENUE DEPARTMENT: ............................................................................................. 7 BOMMANAHALLI ZONE AND THE BEGUR WARD: .................................................................................... 9 SOURCES OF REVENUE:........................................................................................................................... 10 PROPERTY TAX: ....................................................................................................................................... 12 TAX STRUCTURE AND COMPOSITION: .................................................................................................... 15 Institutional framework: ......................................................................................................................... 18 POLICY FRAMEWORK .............................................................................................................................. 20 Various policies for 2012-13 ............................................................................................................... 20 Community interaction ........................................................................................................................... 30 CONCLUSION:.......................................................................................................................................... 31 Appendix I: .............................................................................................................................................. 32 Appendix 2 .............................................................................................................................................. 34 Bibliography ................................................................................................................................................ 38

List of Abbreviations:
KMC SAS PDL RTI KPA BBMP BMP ARO GIS BWSSB BESCOM Jnnurm ULBs Karnataka Municipal Corporation Self-Assessment System Public Disclosure Law Right to Information Karnataka panchayat raj Act Bruhat Bengaluru Mahanagara Palike Bengaluru Mahanagara Palike Assistant Revenue officer Geographic information system Bangalore water supply and sewage board Bangalore electricity supply company Jawaharlal Nehru national urban renewal mission Urban local bodies

Context of study
Zoning and revenue have been the major determinants of sustainable urban growth. Zoning provides the guide to urban growth, land use patterns, management of urban sprawl. Revenue determines the kind of public services and also cost of services provided. The urban local bodies have been the source of resource mobilization owing to rapid urbanization. It is also essential to see how these tiny pockets of habitation which have long remained oblivion to growth and services shape their aspirations with the merger into the city corporations. The context of the study is the Begur ward, which had been under village Panchayat for a long time and then became a ward after the formation of the BBMP. The wards have twin challenges of creating institutions to sustain these changes and also mobilizing resources to realize the dream of improving the socio-economic conditions of the people. Over the past years, several changes in law and policies have been working towards providing services and also

increasing sources of revenue. Both the state and central governments have brought in changes to realize this change. JNNURM property tax primer is one of the examples that can be seen as an attempt by the Central Government. The study of zoning and revenue forms an important study to understand institutions and performance of property tax as a source of revenue.

Study Methodology:
The study is based on both primary and secondary data. Secondary data includes municipal acts, budget documents, and other related documents. Primary data includes discussions, observations and semistructured interviews. Stage 1: Visited Begur revenue Office for geo spatial location of the site Stage 2: Discussions with the ARO, Commissioner, and Tax inspector Stage 3: Literature review Stage 4: Discussions with Lawyers and other consultants Stage 5: Interaction with the community Stage 6: Discussion in the group and issue identification Stage 7: Recommendations/suggestions Stage 8: Report writing and reflection

Outline of the report

The report is broadly divided into 5 sections. The first section gives a context of the study, scope of study, introduction to zoning and revenue. The next section is an overview of sources of revenue with focus on property tax, its structure and composition. The third section is law/institutional framework for property tax administration. Issue identification would follow in the next section with a focus on institutional analysis of the problem. The last section would contain recommendations and conclusion.

INTRODUCTION
PURPOSE OF THE STUDY:

The study of the zoning and revenue department with the focus on the Begur Ward which forms the part of the Bommanahalli Zone of the BBMP has helped in understanding the governance and the structure of the municipality and its working. It has also helped in understanding the various policies and laws related to the revenue department. The study also has helped in analyzing whether the laws and governance structure are applied at the field level. The study has helped right from mapping the government structures and also helped in getting the experience of whom to approach and how the officials can be approached. The link between theory and the practice, and whether the citizens are aware of the existing laws and rules are evidently known from the study. The study has also helped in getting an insight into the various issues that are found in the functioning of the department. The study and the analysis have given an insight about the various systems and have also helped frame possible solutions and some useful suggestions.

EXTENDING PERIPHERIES OF THE BANGALORE CITY:

Bangalore called as the silicon valley of India has been known for its temperate climate, educational facilities, technical and scientific institutions along with the thriving IT boom in the city. These favorable factors have made the city much sought after for global investments and thus has been constantly growing not only in terms of employment, population but also geographically. The Bangalore city has a vast history of municipal governance that can be traced back to as early as to the year 1862. During the British rule, a Municipal board was formed based on the Improvement of Towns Act of 1850. There was later a similar body established in the containment area of Bangalore. These bodies adopted the concept of having not only elected representatives but also started collecting taxes. After the independence, the two independent bodies called the Bangalore City Municipality and the Bangalore Civil and Military Station Municipality were merged together to form the Corporation of

the city of Bangalore in 1949. It came into force under the Bangalore City Corporation Act. The name was then changed initially to Bangalore City Corporation (BCC) and then to Bangalore Mahanagara Palike (BMP). The greater Bangalore Municipal Corporation called the Bruhat Bengaluru Mahanagara Palike (BBMP) was established in the year 2007 and represents the administrative body which is responsible for the civic and the infrastructural assets of the city. It was formed merging 110 villages along with the seven city municipal councils and also one town municipal council1. It has elected representatives called corporators from each ward and elections to the council is held every five years. BBMP is the fourth largest municipal corporation in India after Mumbai, Delhi and Chennai. It works along with other civic bodies like the Bangalore Development Authority (BDA) and is responsible for providing all the basic amenities and facilities for the people. BBMP caters to the various needs of people and consists of various departments like health, hygiene, licensing, revenue, water bodies and welfare of the citizens.

ZONING AND THE REVENUE DEPARTMENT:

The revenue department of the BBMP is one of the important departments that is been created for the zoning and revenue functions related to municipal city. The revenue departments primary functions include the assessment of properties for property tax and the collection of property tax. The Commissioner of the BBMP acts as the head of the department. The BMP divided into 8 zones for administrative convenience and also for the expedition of services to the citizens. Zoning refers to division of the geographical area of the city and it is decided by the commissioner of the BBMP. Zoning is done based on the guidance value of the department of Stamps and Registration. Average market rate, mass appraisal method, real estate market information or a combination of resources like location, type of construction of the building and nature are the factors that helps in determining the zoning. Every zone further consists of various wards and a ward comprises a collective of certain number of villages.

With reference to the website http://bbmp.gov.in/ http://218.248.45.169/download/revenue/introductionandobjectives.pdf

The various zones of the BBMP include2: 1. West 2. East 3. South 4. Yelahanka 5. Mahadevapura 6. Bommanahalli 7. Raja Rajeshwari Nagara 8. Dasarahalli

Since the formation of BBMP, there had to some reformations that were required to ensure efficiency of the department and also increase the welfare services for the citizens. Thus, the implementation of the Self-Assessment Scheme was introduced in the year 2008 for the property tax and it was applicable to the entire jurisdiction of the BBMP which covered an area of about 800 sq. km. In order to accommodate the provisions there was amendment in the Karnataka Municipal Act 1976. The following are the services that are being provided by the Revenue Department of BBMP: 1. Khatha Registration 2. Khatha Transfer 3. Khatha Bifurcation 4. Khatha Amalgamation 5. Assessment of Properties for Property Tax 6. Collection of Property Tax 7. Issue of Khatha Certificate / Khatha Extract

Every service that is been provided also demands certain requirement to be fulfilled by the citizens. Each service may differ according to the kind of service needed, nature of the property being held and also requires certain documents to be submitted in order to fulfill the requirements and rendering of the services.
2

Taken from internet source-http://218.248.45.169/download/revenue/introductionandobjectives.pdf

BOMMANAHALLI ZONE AND THE BEGUR WARD:

Among the eight zones, Bommanahalli zone being one of them has a population of about 431867 and there are about 139312 households3. It is an independent zone and extends till Aanaikal on one side and till BTM on the other side. This particular zone has collected around 130 Crores in the year 2011 and has also planned to attain a target of 165 Crores for 20124. Tax collected from land, buildings, trade licenses for shops, advertisements, etc. The revenue collected is spent on various welfare and developmental activities like laying roads, flyover, maintaining parks, etc. In order to understand the zoning and the revenue department and the various functioning, the Begur ward was taken into consideration. Begur ward comes under the ward number 192 which is included in the Bommanahalli zone. Begur

comes under the Bangalore South constituency and has a population of about 19287 according to the 2001 Census of India data but at present there has been a substantial increase in the population. According to the ward counsillor of the Begur ward there is population of around 90,000 at present and covers an area of 18.80 Sq. Km. The ward is identified under zone F and comes under the backward category B5. Begur comprises of ten villages and has collected revenue of about 25 Crores in 2011 according to the information provided by the ward office. The organizational structure and the employees of the Begur Ward office include: o o o o o o Revenue officer- Mr. Shaman Assistant revenue officer- Mr. Nagaraju Revenue inspectors-4 Mr. Krishna Gowda; Mr. Krishna Murthy; Mr. Dorairaj; Mr. Nanjundappa. First division assistant (FDA) Mr. Guru Prasanna H. L. Tax inspectors (20) D group employee (2)

3 4

Reference to the website:http://bbmp.gov.in/index.php?option=com_content&view=article&id=126&Itemid=151 Taken from the information provided by C.Rama Shettigar, deputy commissioner of Bommahalli Revenue office. 5 Reference to website http://bbmpelections.in/wards/192

SOURCES OF REVENUE:
The BBMP has come up with sources of creating their own revenue from variety of resources. This has been divided into two parts which is called tax sources and non-tax sources. Tax source Property tax Advertisement tax

Non-tax source Fees and fines: building license fees, compounding fees, parking fee, khata certificate and extract fees, betterment levy, improvement charges License fees: hotel and restaurant fee, food trade license, power license fees, bus shelters/traffic signage/kiosks, pet dog license Service charges: birth and death register and extract fees, ambulance hire charges, user charges from hospitals, pay and use toilets, solid waste management fee, infrastructure cess, electric crematoria Income from rent and lease from corporation properties: rent for shops in commercial complexes, community halls, hiring of parks, playgrounds Miscellaneous receipts: road cutting charges, interest from bank deposit like EMD, FSD etc.

Grants from government SFC devolution Grants from government of India- 13th finance commission Special grants from state government on formation of BBMP JNNURM grants- 50% of the project cost

Borrowings Loans from financial institutions External aid- KMRP, mega city etc.6

http://bbmp.gov.in/budget/finalMTFP.pdf

Classification of receipts of 2010-117 Classification Tax revenue Non-tax revenue Grants from state government JNNURM grants loans Other receipts( Amount 1601.00 1678.00 1866.00 195.00 1890.00 cesses, 844.00 Percentage 20 21 24 2 23 10

statutory deductions) total 8073.00 100.00

other receipts(cessses, statutory deductions) 10%

Chart Title
tax revenue 20%

loans 23% non-tax revenue 21%

JNNURM grants 2% grnats from state Govt 24%

http://bbmp.gov.in/images/budget/budgetspeeche.pdf

PROPERTY TAX:
Begur before being included in the formation of the BBMP had been a Gram Panchayat. The Begur Panchayat consisted of three villages namely Begur, Yelenahalli and Chandrasekarapura. The revenue was collected by the Panchayat and there existed no separate department called the revenue department. Revenue was collected on the vacant land and also those buildings which were administered by the Panchayat. So until the Begur was included to be a part of the BBMP, the tax was administered based on the Panchayati Raj Act. Chapter 13 of this act deals with the revenue and it has been specified in the Schedule IV that tax can be levied upon buildings and lands which are not subject to agricultural assessment, within the limits of the Panchayat Area. Tariff: Vacant land 15 ps / acre Building 10 * 10: 125 / sq. ft CESS - 35 %

Funds: Gram Panchayat fund / Can raise loans

Once the Begur became a part of the BBMP, the village became a part of the city municipality and underwent drastic changes. It came under Bommanahalli Zonal Office and also had a separate revenue ward office that was established to asses and collect property taxes. The Self-Assessment Scheme (SAS) system was introduced by the BBMP and it acted as the basis for assessing the properties and the system has its own functioning and structure. The main features of the SAS system are8: 5% rebate is available for those who pay entire year tax within 30 days from the date of the commencement of the financial year Property tax shall be paid in two equal instalments, the First being before 30th May & Second by 29th November of each financial year. After the stipulated time, the Property tax has to be paid along with interest @ 2% per month. Penalty of Rs. 100/- will be levied for non-filing the declarations along with the tax.

Taken from internet source-http://218.248.45.169/download/revenue/introductionandobjectives.pdf

In respect of the properties for which no declarations have been filed within the stipulated time, the Corporation staff will issue notice to the owner of the property calling for information, assess the property for property tax and issue notice of assessment.

Collection of the Property tax: Under the Self-assessment Scheme of the property tax, the owners of the properties are required to pay taxes within a stipulated time. It has arranged for help centers in every ward for the payment of the property tax. There have been recent reforms like the allocation of the PID numbers, online payment using both credit and the debit cards. Bommanahalli had recently achieved the task of allocating the PID numbers which had been one of the advanced and technological innovations undertaken by the BBMP. PID refers to Property Identification Number. Its the recent system that had been implemented from the last 24th February 2011. The number was provided to the areas in the Zone in a span of about 43 days though it was a tedious job. This new system would help in online tracking and help access those who have failed to paid tax or have not done self-assessment. About 165 Cr is the expected revenue that is expected after the implementation of this system. This system would help in controlling and managing the misuse of funds also. Minimum of about 10% compulsory verification is done by the revenue office. They usually undertake random inspection in big apartments, complexes and companies, etc. Penalty is charged in case of false declaration and double the amount is collected of how much ever they have failed to pay. The action is taken by the officials based on the rule 27 on those who fail to pay taxes. The Bommanahalli Zonal office also had a Control room where they receive complaints from the people in the control room. They register the complaint in a ledger and give them a complaint number. Then the complaint is forwarded to the appropriate departments who rectify it usually in about 24 hours. The complaints are received through phones and also online. Every day they receive on an average of about 10 complaints and the control room is found in all zonal offices. The office also has a counter where the taxes can be paid by the citizens.

There has been gradual increase of income from the property tax collection as a result of introduction of self-assessment scheme in the last five years although there were some constraint in implementation of this scheme basically due to calculation problem but later it had been sorted out. Adoption of unit area value as the basis for assessment of tax has yielded good result. Look at properties data of Begur ward Characteristics of properties Data

Percentage of verified properties to total 53.846 properties Percentage of tax-paid properties to total no of 92.3 properties Percentage of defaulter to total properties 7.69

Percentage of defaulters to total tax paid 8.33 properties Percentage of exempt properties to total 0.038 properties

Key data of Begur ward No of properties 2011 No of properties 2012 Property tax 2010 Property tax 2011 No of defaulters 21000 26000 25000 30000 2000

No of exempt properties No of properties accessed No of tax inspectors Collection ratio Average budgetary allocation

10 14000 20 50-60% 200 crore

TAX STRUCTURE AND COMPOSITION:

From the economic point of view, one has to keep in mind that mobilization of resources through different kind of taxes of the states serves twin purposes of having rational tax structure and generating greater means to achieve economic growth. Irrational kind of structure put negative effect on economic growth which will divert the objectives of equity, efficiency and neutrality. Keeping this objective in view, the study shows that different kind of resources and grants that government get for development of local body plays pivotal role in generation of revenues and again it reaches to people through set up mechanism. The republic of India has very simplified tax structure which has been featured with three kind of federal structure that comprises off the following: The union government The state government The rural and urban local bodies and municipal jurisdictions

Our focus of main study understands the basic idea of generating revenue through tax sources. In case of Municipal Corporation and urban local bodies, revenue that is taxable has been collected through property tax and advertisement tax. Begur ward falls in the category where the major source of revenue is property tax.

Tax composition:
Property tax also includes different kind of cess which has been mentioned below: Education cess Health cess Beggery cess Libraries Solid waste management cess 24

Though property tax has been given top priority in Begur ward, it does not only contain property and land but also it covers education cess, health cess, beggar cess, libraries and solid waste management cess. A tax assessed on the real estate by local government. The tax is usually based on the value of the property including the land you own is called property tax.9 So question arises here why property tax is of so much important for Begur ward? It is a kind of financial imposition given by local government on citizens (individual, business and legal entities) and it charged from the real estate properties owners like land, houses, commercial plaza etc. It also helps in generating revenue because Begur ward is fast growing and emerging in terms of commercialization, industrialization and there are also several upcoming real estate projects which have put collection of revenue on high note. Under the Brihut Bangalore Mahanagar Palike (BBMP), area has been divided into different categories in the form of A, B, C, D, E, F on the basis of performance of respective ward in sense of revenue collection. Begur ward comes under F category. Generally price of land has been decided by the head office of the BBMP. BBMP has taken several initiatives to improve income from the property tax collection during the last five years. In order to widening the tax base and ensuring better compliance, Municipal Corporation has introduced global information system and management information system which will help in locating the untraced properties. There has been also gradual increase in the income after introduction of selfassessment scheme in the collection of property tax even though there were some confusion among municipal staff and citizens. After decision of government regarding inclusion of schools, colleges,
9

www.investopedia.com

hospitals and choultries under the net of property tax, it has been estimated that it will also increase additional tax revenue around Rs. 60 Crores every year.10 In case of advertisement tax, Begur ward is not responsible for the collection of tax because it is directly done by Bommanahalli Municipal Corporation. Begur ward has also provision of beggary cess under property tax which help in upliftment of socioeconomic deprived people living under this ward. Solid waste management cess also plays important role in collection of more revenue because alone whole Bangalore city generate about 3500 tonnes of solid waste and this is expected to grow as population of the city is seeing exponential growth.11 Begur ward officials also confirm that there are 26,000 properties in this ward. Of these, 2,000 residential households are not able to pay property tax because either they dont have any source of income or they have been considered as defaulter.

Tax assessment:
Unit area value under SAS: The self-assessment scheme which was introduced in the year 2008 offers citizens of Begur to assess their property tax. The property tax assessment is based on the unit area value as early it was based on annual rental value so later government decided to delink rent control law from property tax assessment. Now new policy does not come under the preview of rental value law. The new system has been evolved on the mass appraisal system of properties. The city of Bangalore has been classified into six zones based on the property valuation done by revenue of department.12 So basically there are four criteria to do self-assessment scheme:13 Zone in which your apartment lies Total built up area of your apartment Total car parking area allotted to you Year of construction of apartment

Then they decide taxation on the basis of different factor which has been mentioned below.
10

http://articles.timesofindia.indiatimes.com/2011-06-29/bangalore/29716911_1_property-tax-capital-valuesystem-palike 11 http://bbmp.gov.in/images/budget/budgetspeeche.pdf
12 13

http://www.indiaproperties.com/articles/taxation-legal/bangalore.aspx http://www.vijaypadiyar.in/blog/2010/05/how-to-calculate-property-tax-bbmp

Tax base:
The rates of different zones/classes have been arrived at after factoring several criteria: Location: tax imposed by government varies due to location. It depends on commercial or industrial or residential area which area properties belong to. Area of construction: it could be commercial or industrial or residential so according to that taxation will also be done. Purpose of construction Type of construction: taxation also calculated on the basis of type of construction. It depends on what kind of material has been used in the construction of properties. Whether it has been made of marble stones, granite stones, mosaic sand stones or travertine stone. After calculation on the basis of unit area value then properties has been categorized into residential and non-residential basis. After the BBMP was formed, there has also been a provision for the collection of tax on vacant land depending on the area.

Institutional framework:
The Revenue department is responsible for the assessment and collection of property tax in BBMP. The Bengaluru Mahanagara pailke became BBMP via a notification dated 16/1/2007. The provisions of Karnataka Municipal Corporation Act 1976 govern the assessment of property tax revenue department. The Commissioner is the head of the revenue department. The BBMP is divided into 8 zones for administrative convenience and also providing services to the citizens. Each zone is headed by a Joint/Additional Commissioner. Under each Additional/joint commissioner there are 2-4 Revenue officers, 5-10 Assistant Revenue Officers, along with other administrative staff.

The Commissioner delegates ordinary powers to the Revenue department in matters of khata registration/bifurcation and assessment of property tax.

Commissioner

Joint Commissioner

Revenue Officer

Assitant revenue Officer Second Division Assistant

First Division Assistant

Assessor

Revenue inspector

Tax Inspector

Class IV employees

Administrative set up of Revenue Office-Begur

Roles and responsibilities of Assistant Revenue Officer (ARO) Fix properties below 2000 Sq.ft and also recommend to higher authorities for sanction for properties measuring above 2000 Sq.ft. He has the responsibility of ensuring that the staffs works efficiently and the work entrusted to them efficiently Power to change khata for bifurcation and also reduce tax under his appeal He reports to the Revenue Officer and to the Joint Commissioner First Division Assistant Receive complaints and maintain registers of salaries of staff, the record of furniture Maintain cheque register, cash register, inward register, budget, administration report Follow the orders of the higher officer to ensure smooth functioning of the office Second Division Assistant Numbering of papers and files received for khata registration, bifurcation In P.R. register

 Maintain register of lease/rented properties, appeals under RTI and other concerned registers Assessors/ Revenue inspector/Tax inspector Put up proposal for khata transfer/bifurcation/registration Supervision over tax inspector regarding collection of properties, verification khiradi so that the collection has been remitted to banks Maintenance of lease properties and also survey for assessment of properties for taxation Tax Inspectors Collect property tax both in field and office and remit it to banks

POLICY FRAMEWORK
Various policies for 2012-13

Property tax policy Using GIS With the GIS based property system, BBMP has brought all the properties into the tax net. The expected revenue from 15, 12,850 is 1500 crores. All schools, colleges (unaided), choultries, hospitals and service apartments would be brought under the commercial tax. Revenue officers would assess at least 30% of the properties and strict action would be initiated against people deliberately declare low tax to evade tax. 14 BBMP is also working closely with BESCOM for updating property tax database. Optical cable fibre policy Lot of optical fibres companies run cables below storm water drains. The Revenue department is expected to make Rs.780 crores by bringing them into the tax net.15 Advertisement policy

14 15

BBMP budget 2011-12 BBMP budget 2011-12

According to new advertisement policy, the advertisement would be sold through tender cum auction. All the private advertisements would be auctioned. Revenue of Rs.150 crores is anticipated.16 Vacant sites cleaning charges There are 20% of vacant properties in Bangalore. BBMP is planning to get Rs.50 crores as revenue for cleaning charges as most of the owners do not keep their vacant sites clean. They are planning to impose 3 times the property tax17 Solid waste management charges for hotels and choultries Hotels and choultries are major contributors for solid waste. BBMP is planning to levy SWM charges on actual basis for handling Solid waste management charges for hotels and choultries. It is expected to get Rs.25 crores.18 Legal framework Karnataka Panchayat Raj Act 199319 Levy of taxes, rates, etc., by Gram Panchayat. - (1) Every Gram Panchayat shall in such manner and subject to such exemptions as may be prescribed and not exceeding the maximum rate specified in Schedule IV levy tax upon buildings and lands which are not subject to agricultural assessment, within the limits of the Panchayat area. Gram Panchayat is entitled to levy taxes, rates on buildings and lands subject to exemptions prescribed which does not exceed the limits specified in Schedule IV which are not agricultural lands within the Panchayat limits.20(KPA) Tax on advertisement and hoardings The Karnataka Panchayat Raj Act also has a provision for recovery of taxes. Recovery of taxes and other dues.- (1) When any tax, cess, rate or fee becomes due, Gram Panchayat shall, with the least practicable delay, cause to be presented to the person liable for the payment
16 17

BBMP budget 2011-12 BBMP budget 2011-12 18 BBMP budget 2011-12 19 http://dpal.kar.nic.in/.%5C14%20of%201993%20(E).pdf 20 http://dpal.kar.nic.in/.%5C14%20of%201993%20(E).pdf

thereof a bill for the amount due from him, specifying the date on or before which amount shall be paid.21(KPA) It also had provision for collection. The provision for collection of taxes rested with the Village Panchayat who had the discretion of appointing an agency for collection prescribed by the village Panchayat. Agency for collection- The tax, rate, fee or other amount payable to the Grama Panchayat may be collected by such agency as the Panchayat may appoint in this behalf, provided that it shall be lawful for a Grama panchayat to lease the right to levy and collect any tax, rates, fees or other amount that may be imposed under this Act, by public auction or by tender, subject to the rules prescribed and the amount due under such lease shall be recoverable in the manner provided 22(KPA) The revenue collection had no formal administrative structures for the administration and collection of tax. The entire operations vested with the village Panchayat and on the discretion of the Panchayat. But, the village received grants for lot of welfare schemes and other grants under provision of rural infrastructure. The revenue from local tax sources did not exceed 9 crores as on 200723. Most of the revenue sources were through Government grants from the state and the centre. This was a typical village though it had a close proximity to Bangalore. Post 2007, when Begur and other 110 villages were brought into the fold of BBMP, the challenge of generating own resources were great. The formation of BBMP brought lot of changes in the system of revenue collection. Karnataka Municipal Corporation Act 1976 (amendments 2001 onwards)24 The formation of BBMP on 16/1/2007 by merging seven CMCs, 1TMC and some gram panchayats with BMP paved the way for new system of property tax. Earlier BMP was collecting property tax on SelfAssessment System, whereas the TMC and CMCs were collecting taxes under the capital value system under the provisions of the Municipal Corporations Act 1964 and the villages were collecting tax as per the provisions of the Karnataka Panchayat Raj Act 1993. The merger led to the amendment of the

21 22

http://dpal.kar.nic.in/.%5C14%20of%201993%20(E).pdf http://dpal.kar.nic.in/.%5C14%20of%201993%20(E).pdf 23 No records available with Begur ward office. The revenue inspector gave the data 24 http://dpal.kar.nic.in/ao2001%5C(31%20of%202001)%20Municipal%20Corporations%20(A)%20Act%20(E).pdf

Karnataka Municipal Corporation Act 1976 on 5th March 2009 by inserting a new section 108A to provide for basis of property tax collection on Unit Area Value. The Government also amended sub section 3 of section 108A to levy tax on illegal or disputed land registered under Khata B. The revenue department has to maintain a separate register for the same. The Act has made it mandatory for the Commissioner for revising property taxes every 3 years with 2008-09 as the base year by 15% In the year 2002 property KMC 1976 was amended to follow capital value system of evaluation Article 285 of the Indian Constitution exempts Government from paying any taxes. Section 109 provides for the method of assessment of property tax. It provides for the assessment of land or building or both. The Act provides for a levy of 6% on the vacant land, but it is not being levied. Zoning was done in the year 2001 and according the BBMP was divided into A to F zones. Each zone has a demand and collection register called the DCB register. Defaulters list is prepared at the zone level and regular meetings are held to review the situation Section 110 provides a general exemption to tax like places of worship, charitable institutions Recovery provision Rule 27 provides for recovery of property tax of the defaulter who does not within 15 days of notice period or 30 days from the commencement of the collection, by selling movable property and if not adequate for recovery of tax, action can be initiated against the defaulter through civil action Provision for appeal Rule 15 of taxation provides for an appeal to the assessed against the assessment and can file objections within 7 days from the date of demand provided he has paid tax for the previous year. The communication for a meeting and the results thereof would be communicated through post. The assesse can go for a second appeal before the Taxation Appeals Committee within 15 days from the date of communication by the delegated authority. The committee consists of seven elected councillors with one of them as the Chairman. The TAC has to dispose the appeal within 90 days.

Features of Self-Assessment system25 1. 5% rebate is available for those who pay entire year tax within 30 days from the date of the commencement of the financial year 2. Property tax shall be paid in two equal instalments, the First being before 30th May & Second by 29th November of each financial year. 3. After the stipulated time, the Property tax has to be paid along with interest @ 2% per month. 4. Penalty of Rs. 100/- will be levied for non-filing the declarations along with the tax. 5. In respect of the properties for which no declarations have been filed within the stipulated time, the Corporation staff will issue notice to the owner of the property calling for information, assess the property for property tax and issue notice of assessment. Guidelines under JNNURM: JNNURM proposes the following guidelines for ensuring transparency The core objectives of Public Disclosure Law are:26

To provide appropriate financial and operational information on various municipal services to citizens and other stakeholders.

To promote efficiency and consistency in the delivery of public goods and services by the municipality. To enable comparison over time (of a particular ULB) and space (between ULBs) by disseminating information in a structured, regular and standardized manner.

The notification states that ULBs and other agencies providing municipal services have to voluntarily declare information on service levels in the following manner (a) a summary of the information disclosed in at least one newspaper circulated in the district

providing the address of the office, website and/ or e-mail and other contact details where full information may be accessed; (b) (c)
25 26

Full disclosure of all information on the website of the local authority; Notice board of the Local Authority;

BBMP website (bbmp.gov.in) BBMP website (bbmp.gov.in)

(d)

Notice board of Ward offices, if any;

The public disclosure law ensures the display of relevant information in the respective wards is mandatorily done than being demanded from the public.

The Schedule to the notification provides the details of the information to be disclosed by ULBs, frequency of disclosure (half-yearly, annual etc.), level of disclosure (ward, city) and period for which information has to be disclosed (one year, etc.).

Right to Information Act 2005 (RTI) RTI has also emerged as a powerful tool to ensure transparency in the system. Lot of provisions in the RTI gives information about the affairs of the departments. Citizen charter The citizen charter of the revenue department provides for details of the services available, number of days required for each service, user charges, grievance redressal mechanism, list of officers and contact details Grievance redressal mechanism The BBMP department has online service called Spandana to register complaints online. There is also a control room at each zone to register complaint through IVRS. Apart from these, complaints can be registered at contact centres of the BBMP. Issue identification Begur ward has seen a transition from a village panchayat administration to its merger into BBMP. There has been a change in the legal/institutional and policy changes in this transition from a village to a ward. Few of the issues that emerged out of this study are based on the data collected through interaction from ARO, Additional Commissioner and other staff of the revenue department Begur. Examining property tax as the primary source of tax, following results emerged.

Characteristics of properties-Begur Characteristics of properties Percentage of Data%

verified 53.846

properties to total properties Percentage of tax paid 92.3

properties to total number of properties Percentage of defaulters to 7.69 total properties Percentage of defaulters to 8.33 total tax paid properties Percentage of exempt 0.038

properties to total properties

Tax composition Tax composition Percentage of properties 2011:12 Percentage of Property tax 2011:2012 Percentage of verified properties 2011:2012 Data 80.76% 20% 57.14%

Difference in properties- 26,000-21,000=5000 Difference in property tax- 30,000-25,000=5000 Rate of property tax growth- 1% Performance of property tax based on certain indicators and institutional analysis 1. Tax Coverage (Appendix I) Coverage ratio Effective coverage 53.846% 92.30%

2. Collection ratio-50-60%27 3. Percentage of exempted properties-0.038 Analysis of the above mentioned indicators gives a fair sense of what is happening in Begur ward with respect to revenue from property tax. The analysis points to increase in number of properties from the previous year 2010 to the next year 2011. But, the rate of growth in property taxes is by only 1%. The effective coverage ratio is as high as 92.3%, but the growth rate is not high. The number of properties which are verified is 14,000(Appendix). The guidelines issued to the revenue department by the Commissioner in lieu of resource mobilization sets guidelines for verification, roles and responsibilities of the survey team, which is involved. The following are the guidelines which are enlisted below28 At the ward level, a team consisting of the following members would be constituted Tax collectors Tax inspectors Tax assessors Assistant Engineer Health inspector

Roles/responsibilities of the survey team at the ward level The team should survey every street and prepare a map of the list of properties and identify each and every property. All the properties should be brought under SAS and defaulters are identified. The team should survey at least 40 to 50 properties per day After the inspection of the properties, the list of defaulters who have not paid their taxes from 2008 onwards should be entered into a separate register called A register and those properties which do not

27

Tax inspector gave us the data

28

Guidelines for resource mobilization by a circular from the Commissioner dated 28-07-10(BBMP website bbmp.gov.in)

fall into the SAS should be entered into B register. Appropriate action should be initiated against people who have not complied with the rules prescribed under SAS (Self-Assessment System) After a list has been prepared, the property should be assessed as per SAS guidelines and a special notice be served to those people under Section 108(A) of the KMC Act 1976 within seven days of the assessment. This should be done in consultation with the ARO (Assistant Revenue Officer) After serving the notice, they should duly acknowledged for further action If the PID had not been issued earlier, a new PID should be issued to the assesse and the PID number should be appropriately used and updated for future use During the survey of properties, all those properties which have been under SAS needs to be maintained in C register The team should also inspect all trade establishments and collect details of trade license and take note of anyone who has not taken license Supervisory Team: 1) The supervisory team consisting of Assistant Revenue Officer, Assistant Engineer and other members from Health supervise the work of the team and provide guidance from time to time. They have to undertake random verification of 10% 2) The Supervisory team is supposed to meet the Additional/Joint Commissioner once in a week to report weekly updates 3) The Revenue Officer in charge would co-ordinate the working of the survey team and the supervisory team and time to time provide required assistance in terms of stationery, manpower and other requirements. He is also entitled to send out circulars facilitating survey, collection and other things related to it. He has to verify at least 5% of the properties 4) The Additional/ Joint commissioner is responsible to provide the necessary maps for survey and also any other facilities for carrying out mapping. He has to verify 2% of the properties. All the members of the survey team and staff are to be provided training from time to time in their respective zones 5) The Additional/Joint Commissioner is responsible for working out a detailed plan of action for tax administration and collection and also its implementation. He has to supervise the overall

functioning of the survey team and co-ordinate with the team for effective property tax collection. He can appoint extra staff on contract to help in the collection of property tax 6) The Additional/Joint Commissioner has to provide required support to all the wards of his zone along with the IT support team 7) The IT support team is responsible for updating all the necessary requirements in compliance with the new changes in the assessment in all the wards from time to time at their respective ward offices 8) All the transactions and interactions should be on line and nothing should be hand written

The number of properties under verification starts with 40-50 per day for a tax inspector to 2% for the Additional/Joint Commissioner. The numbers of tax inspectors in Begur ward are 20. It is very difficult for the tax inspector to verify 40-50 properties per day. He is also responsible for collecting property taxes. They have a set target of collecting 60 lakhs to 1 crores per month between Januarys to March. The guideline for verification of properties increasingly becomes sparse given the other responsibilities the higher officials have. Moreover, the revenue inspector has the discretion to choose any property for verification and is not guided by any fixed rules. Section 112 A (1) provides for 5% rebate for those who file the return in time and pay the tax on the basis of the return. The Commissioner has the discretion to levy a penalty of 50% of the property tax assessed for non-filing of return and in the case of willful incorrect filing of wrong return a penalty not exceeding twice the amount of difference between the tax assessed and the property tax paid. It also provides for 50% rebate for owner occupied buildings. Unauthorized buildings are liable for twice the property tax.29 But, the Begur ward has not seen been a witness to such a provision even though there were few instances. There is no register maintained of properties who have filed an appeal The institutional and administrative structure does not have an independent valuation body, which brings down the rate of tax collection.
29

http://dpal.kar.nic.in/ao2001%5C(31%20of%202001)%20Municipal%20Corporations%20(A)%20Act%20(E).pdf

Another lapse which can be noticed is the absence of an effective mechanism for knowing how many have paid the tax. All the cheques are issued in the name of the Commissioner and even the online payments are centrally routed. There is a time gap to realize who has paid online, at the centres. Though the collection is decentralized, it is still centrally managed at the zone level. Lack of audit is also another aspect which contributes to the realization of money and deepens pilferages in collection. Another provision in the ward for about 20% who are unable to pay taxes based on the fixed assessment rules and rates, they are allowed to pay a lump sum amount.30 Another issue in the ward is there is no disclosure of any information in the ward except for which are the wards, which are the villages covered displayed in the office. The contact details of the employees are displayed. But, any information with regards to revenue collection or any other information has not been displayed as per the Public disclosure law. The next most significant issue is that the allocation of funds for the ward entirely depends on the bargaining power of the councillor. Most of the funds allocated are used for maintenance work and solving water woes. Another significant factor which emerged out of the study on a broader perspective is that ward is more of an administrative unit of Governance, though there are elected councillors. There is a complete de link between the elected councillors and the policy making. Though there are provisions for ward committees for a population of more than 3 lakhs, these have not emerged as effective mechanisms of policy making. This has led to poor socio-economic development of certain wards. Wards are more of bureaucratic governance than a democratic one.

Community interaction
We conducted few interviews of about 25 people in the ward who were paying taxes and also conducted random interviews of people on the streets. Few observations from the interview Lot of them show willingness to pay taxes They find the new system friendly because it is self-assessment

30

There is a provision for people who live in gram tunas and live in small houses to pay lump sum amount for 110 villages. A provision has been made as village calculator.

Though there are allowed to pay taxes electronically and through credit and debit cards, not many use them

Many are not aware of the consequences of not complying to the guidelines of SAS Few people were willing to bribe the tax inspectors for paying a low tax rate

Recommendations/suggestions 1) An independent valuation team which does time to time verification of properties and maintain a database of the changes incorporated. 2) IT enabled sharing of collection and realization which is done on ERP based applications. 3) Better grievance redressal mechanism through a dedicated team of people rather than adhoc assistance 4) Display of ward wise, zone wise and area wise collection under Public disclosure law 5) Regular audit of property tax assessments to plug holes and improve efficiency 6) Close liaison with other departments like BESCOM and other agencies like BDA to understand land use and avoid uneven allocation

CONCLUSION:
Zoning and revenue as determinants of urban development and planning have evolved through a series of legal and institutional mechanisms. With rapid urbanization and changing demography of cities, both resource mobilization and service delivery continue to be key challenges. There have been attempts of decentralization of urban governance through various administrative structures, but it is yet to be realized due to lack of effective public participation in the whole process. There are certain laws ensuring transparency in the system like the RTI, PDL. But, the participation of people in the process has been minimal. Any reforms or process should be people friendly to ensure greater participation from them like the SAS. Political will, strong institutions and people participation would ensure that the goals of effective zoning and revenue are achieved.

Appendix I:
Characteristics of properties-Begur Characteristics of properties Percentage of verified properties to total properties Percentage of tax paid properties to total number of properties Percentage of defaulters to total properties Percentage of defaulters to total tax paid properties Percentage of exempt properties to total properties Data 53.846 92.3

7.69 8.33 0.038

Tax composition Tax composition Percentage of properties 2011:12 Percentage of Property tax 2011:2012 Percentage of verified properties 2011:2012 Data 80.76% 20% 57.14%

Key data Begur ward Number of properties 2011 Number of properties 2012 Property tax 2010 Property tax 2011 Number of defaulters Number of exempt properties Number of properties assessed Number of Tax inspectors Demand percentage Collection ratio Collection target per month for the tax inspectors Number of slums Number of verified properties Revenue receipts 21,000 26,000 25,000 30,000 2000 10 14,000 20 90% 50-60% 60 lakhs to 1 Crore between Jan and March and again between Nov to Jan 1(Chikka Begur) Unnotified slum 60,000 crores

Non-revenue receipts Advertisement revenue Average budgetary allocation for Begur

No idea Begur does not collect advertisement revenue. It is done centrally for Bommanahalli 200 crores

Difference in properties- 26,000-21,000=5000 Difference in property tax- 30,000-25,000=5000 Rate of property tax growth- 1% Per capita tax ratePopulation: 90,000

Advertisement tax for Bommanahalli The Advertisement Department of the BBMP functions under section 134, 135 of KMC Act and the Advertisement Bye-laws framed under these sections. 2007-08 2008-09 11,24,595 2009-10 23,23,679 2010-11 11,55,145

Total demand Tax collected Arrears

42,11,684 23,23,679 18,85,005

Coverage ratios Coverage ratio = Assessed properties/Total properties x 100 Effective coverage = Tax paying properties/Total properties x 100

Appendix 2
Questionnaire (Revenue Officials) 1) What are taxes is the ward or the revenue department authorized to levy? ___________________________________________________________________________ 2) What is the tax autonomy of the department to fix tax rates and tax bases? ___________________________________________________________________________ 3) Are they authorized to administer taxes? _____________________________________________________________________________ 4) Have regulatory structures been established to set utility tariffs, user charges and rates for other revenue sources? _____________________________________________________________________________ 5) Are the municipalitys budget, summary accounts, and financial reports made available to the public on a regular basis? Are these accounts and reports regularly made available to other levels of government? _____________________________________________________________________________ 6) Have standards for ward wise accounting and financial reporting been established? _____________________________________________________________________________ 7) Are the wards accounts and financial reports audited on a regular basis? _____________________________________________________________________________ 8) How do the actual collections of the revenue match up to the total revenue collection? _____________________________________________________________________________ 9) Each ward is set a prior target and it is matched up to the total revenue through the various zones _______________________________________________________________________________ 10) What is the percentage wise break up of tax collection? _______________________________________________________________________________

11) For all taxes that the municipality is legally authorized to levy and collect, how do actual collections compare to: a) the amount billed, and b) the amount that could be billed if the tax base data were up to date and the municipality could determine its own tax rates? ____________________________________________________________________________ 12) What is the extent of coverage of property tax? _____________________________________________________________________________ 13) What is the rate structure of the property tax? How often is it updated? ____________________________________________________________________________ 14) Is there a record system of landownership in place? _______________________________________________________________________________ 15) Is there an assessment system in place? Are there professionally-trained assessors? _______________________________________________________________________________ 16) Is there a decent collections system in place? Is there a high level of uncollected taxes? __________________________________________________________________________ 17) How do collection costs compare to collected revenue? __________________________________________________________________________ 18) Is there evidence of corruption in property tax administration? _________________________________________________________________________ 19) What was the earlier structure of the revenue and structure of tax? ___________________________________________________________________________ 20) Do Tax inspectors any set targets for assessment? ___________________________________________________________________________ 21) Do tax inspectors have any targets for collection? ___________________________________________________________________________ 22) Number of residential properties _____________________________________________________________________________ 23) Number of non-residential properties

_______________________________________________________________________________ 24) Number of exempt properties _______________________________________________________________________________ 25) Number of defaulters _______________________________________________________________________________ 26) Revenue from property tax for previous year 2010 _______________________________________________________________________________ 27) Revenue from property tax for 2011 _______________________________________________________________________________ 28) Number of properties for 2010 _______________________________________________________________________________ 29) Number of properties for 2011 _______________________________________________________________________________ 30) Number of verified properties _______________________________________________________________________________

Questionnaire for community interaction 1) Name of the respondent ___________________________________________________________________ 2) What kind of property is it according to BBMP revenue? ____________________________________________________________________

3) Do you pay property tax online or at the help centre? ___________________________________________________________________ 4) Do you pay tax in instalments or at one go? ____________________________________________________________________ 5) Are you happy with the current tax system? ______________________________________________________________________ 6) Has the tax inspector visited you? _____________________________________________________________________ 7) Are you aware of the penalties when you default payment? ____________________________________________________________________ 8) Do you have grievances regarding the property tax? ___________________________________________________________________ 9) Are you aware of the mechanisms and authority to be approached grievance redressal? ____________________________________________________________________ 10) Has there been any improvement from the past 5 years? ___________________________________________________________________

Bibliography
AJIT KARNIK, A. R. (2004, August 21). Reforming Property Tax System. Economic and political weekly, pp. 3818-3826. MATHUR, O. P., & DEBDULAL THAKUR, N. R. (JUly 2009). URBAN PROPERTY TAX POTENTIAL IN INDIA. New Delhi: National institute of public policy and finance. MOHANTY, P. K. (n.d.). P. K. MOHANTY, B. M. (2007). Municipal finance in India-An assessment. Mumbai: Department of Economic Analysis and Policy.