The state cabinet on Thursday decided to levy a 1% fire cess on new multi-storey buildings coming up in Bengaluru and rest of Karnataka in what builders see having a marginal impact on their initial investment in upcoming projects and possibly increasing property prices.
The cabinet decided to amend the Fire Force Act, 1964, to pave the way for the levy of 1% fire cell along with the property tax on new multi-storey structures. The cess, the government said, will help boost the efficiency of the fire force department.
According to Bengaluru’s real estate developers, the proposed levy would add to an already rising cost burden, driven by soaring construction expenses and multiple taxes.
Builders are likely to pass on the new cess to homebuyers, pushing property prices higher. Industry stakeholders warn that such recurring cost inflations may dampen demand and hurt ongoing and upcoming projects.
The cess is aimed at raising funds to strengthen the fire safety infrastructure and emergency response capabilities across Karnataka’s rapidly urbanising cities, particularly Bengaluru.
While the move is driven by public safety concerns, Bengaluru’sWhile the move is driven by public safety concerns, Bengaluru’s developers are raising red flags over the timing of its introduction and the financial strain the cess could cause.
Industry insiders estimate that a 1% cess on property tax could run into about Rs 1 crore for a residential project of 1 million sq ft.
According to industry insiders, the cess will be applicable to new constructions and linked to licensing processes, with the state reserving the right to revise rates periodically.
With developers under pressure to maintain margins and meet regulatory compliance, many fear this could disrupt ongoing and upcoming projects, slow down new launches, and temper buyer sentiment. They are calling for clearer guidelines, phased implementation and greater transparency in fund utilisation to ensure the policy improves safety without derailing growth.