The BBMP said the property tax was not appropriate to the zones that the residents had inadvertently mentioned.
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In a relief for 78,500 families, the Urban Development Department (UDD) has waived off a Rs 240-crore penalty that the BBMP had imposed on them.
The BBMP had imposed the penalty, citing errors in zonal classification.
They said the property tax was not appropriate to the zones that the residents had inadvertently mentioned.
Though the state cabinet had approved the waiver two years ago, it took several reminders from the civil society, especially the Bengaluru NavaNirmana Party (BNP), to prompt the UDD to issue the order on Wednesday.
The order stated that the BBMP imposed Rs 240 crore saying the property owners had wrongly entered the zones, which had less property tax. This was because the tax value varied in the six zones (from A to F) depending on the location.
The zones, first classified in 2002, were updated and reclassified in 2016.
Among the taxpayers, 78,500 received notices since they paid their taxes based on the 2002 classifications inadvertently since they did not realise the zone classifications had changed.
This, however, was seen as a mistake by the BBMP since property owners were allowed to change technical details like zonal classifications online. The zonal option should have been automatically locked when the owners entered their house addresses.
The UDD also asked the BBMP to strengthen the online tax payment system, pointing out that it may not be able to make good losses it incurs on account of a poor system.