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The Karnataka government will soon implement property tax on unauthorised rural properties under the Karnataka Gram Swaraj and Panchayat Raj (Amendment) Bill, 2025. Detailed guidelines are expected by mid-July. The move aims to bring nearly 95 lakh rural properties under formal governance and taxation. Over 50 lakh rural properties already have e-khatas, generating INR 1,273 crore in revenue this fiscal year. Minister Priyank Kharge highlighted that the initiative will boost local revenues and improve services like water, sanitation, and roads. Inspired by the success of Karnataka's B-Khata system in urban areas, the rural framework seeks to regularise informal landholdings and strengthen Panchayat finances. The upcoming guidelines will outline tax assessment, exemptions, and regularisation processes. This initiative supports Karnataka's broader push for decentralised, equitable development and aims to enhance infrastructure and civic services across rural regions.
The Karnataka government is moving ahead with plans to impose property tax on unauthorised properties in rural regions, with detailed guidelines expected to be rolled out by mid-July. This move is part of the recently enacted Karnataka Gram Swaraj and Panchayat Raj (Amendment) Bill, 2025, which aims to broaden the tax base and integrate nearly 95 lakh rural properties under formal governance and taxation. Advertisement
The Rural Development and Panchayat Raj (RDPR) department has already issued e-khatas - digital property ownership certificates - to over 50 lakh properties in rural Karnataka, successfully collecting more than INR 1,273 crore in revenue during this financial year. Minister for Rural Development and Panchayat Raj, Priyank Kharge, pointed out that extending taxation to unauthorised rural properties will bolster revenue collection and enhance the delivery of essential services such as water supply, sanitation, and roads in these areas.
Minister Kharge also responded to opposition critiques, emphasising that Karnataka's efforts at decentralising governance have been nationally recognised. He cited the state's top ranking awarded by the Prime Minister for its decentralisation of power to Panchayats and local bodies. This move towards taxing unauthorised rural properties is seen as a natural progression of Karnataka's ongoing drive to regularise land ownership and improve transparency in property records.
Previously, Karnataka had implemented the B-Khata system in urban areas, which enabled the formal registration and taxation of unauthorised properties, thereby bringing millions of urban dwellings into the tax net. The success of this urban initiative has encouraged the government to adopt a similar framework for rural properties, where unauthorised constructions and informal landholdings have been challenging issues for local administrations.
This extension of property tax to rural unauthorised properties reflects a broader policy push aimed at strengthening local governance structures by increasing their financial resources. By formalising property records and tax liabilities, rural local bodies will have greater capacity to invest in infrastructure and public services, supporting sustainable rural development.
The Karnataka government is expected to finalise and publish the taxation guidelines soon, which will detail the criteria for tax assessment, exemptions, and the process for property owners to regularise their holdings. This initiative marks a significant step toward equitable taxation and decentralised governance, bringing rural properties in line with the evolving property regulations seen in urban Karnataka.
By integrating these properties into the formal tax system, the government aims to enhance local revenue streams and improve the provision of civic amenities. While the policy has faced some criticism, it underscores the state's commitment to decentralisation and equitable development across urban and rural regions.
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