At the BBMP council meeting on Friday, it was decided that all educational institutions should be brought within the property tax net. The decision came as the corporator of Jayamahal ward, NK Gunashekar, raised a query during Zero Hour, about the rationale for offering exemption from property tax to educational institutions, many of which run like businesses that make huge profits. Gunashekar said that the exemption from property tax was made on the assumption that the schools and colleges were run as charitable organisations.
"According to the Karnataka Municipal Act, 1976, Section 110 (i) (b) taxes have been exempted for the educational institutions. However, almost all the educational institutions are collecting donations and making huge profits. They are nothing but commercial establishments now," he said.
Making a case for bringing schools and colleges that make huge profits under the tax net, Gunashekar said, "We have to collect all necessary taxes from the educational institutions, especially since the BBMP also provides them all facilities like garbage collection, provision of approach roads and street lights and other facilities.
The private institutions that run medical and engineering courses are collecting huge sums of money, as they also charge exorbitant fees and demand large sums in donation. Owners of such institutions drive around in expensive luxury cars. Why should the Palike not collect taxes, when these institutions are so commercialized? The Palike could generate more than `100 crore per year as property tax from such institutions. Right now, they only pay nominal sums as cess to the Palike," Gunashekar said.
BBMP commissioner Siddaiah said that the suggestion offered by Gunashekar was a very good one. He said that he knew of one educational institution that paid one crore in income tax. "I know that there are educational institutions that pay huge sums in income tax. It is true that many educational institutions have now moved away from the model of being non-profit institutions, and make large sums as profit each year. The Palike will collect details of institutions paying income tax, and also make them pay property tax, so that the BBMP can generate greater revenue," said Siddaiah.
It is reasonable to assume that once the educational institutions are brought under the tax net, the managements of these institutes will transfer the additional financial burden to the parents of students.
When DNA contacted some private schools affiliated to the CBSE and ICSE boards for responses to this move, many said that it would make no difference at all, since they already pay property tax. "We have been paying property tax to the BBMP for the past 20 years," said M Srinivasan, founder-chairman, Gear Innovative International School and president, Management of Independent CBSE Schools Association, Karnataka.
Manju Sharma, principal of Delhi Public School, Bangalore South, also said that the school has been paying property tax.
Some other decisions taken by the BBMP Council on Friday:
- Ward number 65 Malleshwaram 6th Cross Road to be renamed Dr H Srinivasaiah Road.
- `13.12 crore approved for construction of an indoor stadium at Indiranagar which will meet international standards.
- 51 acres of land at Bagannadoddi area will be handed over to the Karnataka Compost Development Corporation (KCDC) for the construction of a garbage disposal unit.
- `4.90 crore approved for providing basic facilities for JP Park at Rajarajeshwarinagar zone
- `12.14 lakh will be given as compensation on land recovery.
- `14.30 lakh approved for paying for property compensation
- Henceforth, the Palike will consult the standing committee before giving government property on lease, or putting it up for sale.
- One lakh rupees granted to the Kala Sangha for the performance of the mythological drama Danashoora Karna during Karaga festival near KR Market.
- `3.74 crore approved for constructing an electric crematorium at Byatarayanapura
- `7.77 lakh approved for widening Race Course Road
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