24 April 2021
Mr. X has bought a flat in an apartment in Bruhat Bengaluru Mahanagara Palike (BBMP) limits from a builder in April 2015. The apartment has not been fully completed in terms of amenities and other pending work and the builder has now turned away from completing the project.
There is no Completion Certification (CC) or Occupancy Certificate (OC) received from the municipal authorities since the project is not yet fully completed. However many residents have moved in due to their personal reasons. The flats are registered in the name of the residents and appropriate stamp duty has been paid along with proper documentation and has been recorded in the sub-registrar's office. Mr. X has also got a registered Sale Deed in his name describing the schedule of property i.e the flat in the sale deed.
In this case, how is the BBMP property tax to be paid by Mr. X.
The issue in consideration is as follows: 1. There is no CC or OC in the name of the project 2. The Khata is in the name of the land owner which has not been bifurcated and transferred in the name of flat owners 3. Mr. X has been living in the flat from April 2015 and so far has not paid any property tax
24 April 2021
Most of the flats in Bengaluru fall under this catetory (i.e. no CC/OC). 1) Since the sale deed is registered and the owner has also moved in, he is legally the registered owner of the flat. In order to pay property tax, the owner has to obtain khatha in his name. 2) Now that A khatha is not going to issued in this case, the only option is to apply for an entry in B register of BBMP (commonly known as B khatha). 3) On the basis of B katha, initially the property tax can be paid at the BBMP office and thereafter online payment can be made on BBMP portal. Note: BBMP used to earlier issue B khatha, now am not sure whether this process is still in practice.
24 April 2021
Thanks Poornima, this is somewhat clear. Some follow up questions on this:
1) The land on which the construction is made is A Khata. So does that mean the building would be considered as B Khata whereas the land is considered as A Khata.
2) If the property tax payments are made as per the entry in BBMP records as B Khata, can the property be pledged or sold or mortgaged for loans with the banks without any problems
3) The case is pending with the court against the builder for non-completion. Suppose in future if the flat owners get the Khata transferred in their names, does the tax paid based on the entry in BBMP records (or B Khata) will be credited to this bifurcated Khata account to make it legally valid.
4) In case we choose not to make any property tax payment till the issue is settled by the court, are there any implications apart from interest and penalties that may be required to be paid for arrears of tax.
24 April 2021
1) A khatha in respect of each flat would be provided only when there are no deviations in construction from the approved plan. So the land with A khatha may not guarantee A khathas in respect of each flat. You need to specifically apply with requisite documents to obtain A khatha in respect of a specific flat. 2) It is not easy to sell/mortgage property having B khatha. Earlier banks used to sanction loan in respect of such properties but now am not sure about it (especially after some order by High Court, a few years back). 3) In future (when the highly disputed) Akrama Sakrama, if at all, implemented, you may need to pay betterment charges in respect of property having B khatha and regularize it to get A khatha. Since it would be a conversion from B to A khatha, I don't think BBMP can once again demand property tax in respect of the same property. 4) Interest and penalty would be applicable as usual. Since the property has been occupied it would not be easy for the competent authority to vacate the occupants unless there is a decree from the court (but there were certain exceptions too in the past which you may be aware of). At the end, anything would be risky. Difficult to answer whether to have or not have B khatha, whether to pay or not pay property tax. This is the situation of most of the apartments in Bengaluru I think.
CAclubindia
