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The Karnataka government plans to extend the B khata system statewide to regularize unauthorized properties and increase urban local body (ULB) revenues. Of 55 lakh urban properties, only 22 lakh have A khatas, while the rest will now be taxed under B khatas. The move aims to boost property tax collection, currently at INR 1,500 crore from 302 ULBs. The state expects significant revenue growth, supporting urban infrastructure and civic amenities. Implementation begins February 10, with district officials issuing B khatas within three months. Real estate leaders support the decision but demand transparency in fund allocation for infrastructure development.
Khatas serve as official property registers maintained by urban local bodies (ULBs) to collect property taxes. While legally approved properties receive A khatas, unauthorised properties have traditionally remained outside the tax system. Over the years, successive governments have attempted to regularise unauthorised properties, notably through the Akrama-Sakrama scheme. However, these efforts have faced legal obstacles. The B khata system was introduced within Bengaluru under the Bruhat Bengaluru Mahanagara Palike (BBMP) in 2023 as a temporary measure, and following a recommendation by a cabinet sub-committee, the government now plans to extend this policy to the rest of Karnataka. Advertisement
Of the 55 lakh urban properties in Karnataka (excluding Bengaluru), only 22 lakh currently hold A khatas, and many of these are in the process of being converted into e-khatas. The government plans to issue B khatas to the remaining properties, ensuring they contribute to tax revenue. The total property tax collection from 302 ULBs currently stands at just INR 1,500 crore. By expanding the B khata system, authorities expect to significantly increase municipal funds, which will support urban infrastructure and civic amenities.
Forest Minister B. Eshwar Khandre, who chaired the cabinet sub-committee overseeing the decision, emphasized the importance of strengthening local governance. He noted that the objective is to generate revenue for ULBs, enabling them to develop better infrastructure and civic services. This initiative is also aimed at making these bodies self-reliant and reducing their dependence on government funding.ULBs in Karnataka rely primarily on property tax and government grants for their revenue.
However, delays in holding elections for ULBs have resulted in them missing out on INR 2,800 crore in central government grants. Many municipal bodies also struggle to collect tax revenue, particularly from unauthorised properties. For example, the Mysuru City Corporation collected only INR 190 crore in property tax during 2023-24, falling short of its INR 320 crore target.
To expedite the process, Revenue Minister Krishna Byre Gowda announced a strict timeline for implementation. He stated that deputy commissioners across all districts had been instructed to issue B khatas for properties without e-khatas and to recover pending property taxes under a one-time settlement scheme. The process is set to be completed within three months, starting from February 10.
The decision has been largely welcomed by real estate stakeholders, who see it as a step towards better urban management. However, industry leaders have urged the government to ensure that tax revenues are utilised effectively for infrastructure development. Bhaskar Nagendrappa, president-elect of CREDAI-Karnataka, called for transparency in fund allocation. He emphasized that the government must ensure the tax collected is utilized to improve roads, drainage, and civic amenities in areas covered under the B khata system. He also urged the government to work towards the full regularization of unauthorized properties and conduct timely elections for ULBs, enabling them to qualify for central grants.
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