Karnataka targets Rs 2,000 crore revenue from B Khatas in Tier-2 cities

The government, grappling with fiscal constraints and exploring avenues to diversify its revenue sources, is considering the issuance of B khatas to owners of unauthorized properties in tier-2 and tier-3 cities. This move is projected to bolster the government's coffers by a substantial Rs 2,000 crore. At the helm of this initiative is a cabinet sub-committee led by Forest Minister Eshwar Khandre, which is dedicated to finding ways to augment the revenues of local bodies. Their forthcoming recommendation revolves around providing provisional certificates to the owners of these illegal properties.
The practice of issuing B khatas is not new, as the civic agency in Bengaluru, BBMP, already undertakes this process while also collecting property taxes. However, a common misconception prevails among property owners that paying taxes results in the regularization of their properties. A senior BBMP official pointed out that there is a concern that people tend to assume their properties are regularized once the government imposes a tax on them. The Khandre-led committee is slated to convene on Thursday, with an imminent report submission to the government.
The urgency of this situation lies in securing a stable revenue source for the cash-strapped urban local bodies (ULBs) in cities outside Bengaluru. Khandre emphasized the potential revenue stream of imposing property taxes on unauthorized buildings and vacant land, with preliminary surveys estimating that there are approximately 55 lakh such illegal properties. Taxing these unauthorized properties is considered a strategic means of shoring up the government's financial resources, which are instrumental in funding various guarantee schemes and development projects.
The situation finds its roots in a decision made in August, where the cabinet entrusted Chief Minister Siddaramaiah with the task of forming a sub-committee to investigate this issue and propose recommendations. Khandre was appointed as the head of this panel, drawing upon his experience as the municipal administration minister from 2013 to 2018. A similar scenario unfolded in 2017, when BBMP decided to segregate authorized and unauthorized properties, creating two registers. In the first register, known as A khata, were listed legal properties that had acquired all the necessary approvals.
The second register, termed B khata, included properties that had transgressed building regulations, encroached on public land, and committed similar infractions. However, the issue comes with political sensitivities and inherent risks. A senior BBMP official highlighted that, in Bengaluru, past governments faced pressure from citizens to convert B khatas to A khatas. However, this cannot be done as a Supreme Court case is pending. Khandre clarified that the government's primary objective is the collection of taxes and not the regularization of these properties.
Regardless of their legal status, all property owners benefit from the services and amenities provided by local bodies and, therefore, should contribute towards these expenses. Property regularization is an entirely separate matter, with B khatas serving as a temporary measure. In pursuit of equity, the committee is presently deliberating a proposition to increase the property tax for unauthorized properties, exceeding the levy imposed on lawful property owners. This step seeks to establish parity within the tax structure.

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Karnataka targets Rs 2,000 crore revenue from B Khatas in Tier-2 cities

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