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Get ready to shell out more tax for Delhi home

The MCD is proposing to increase tax rate on residential and commercial properties by 5%, which effectively means an overall increase of 50% in the amount paid, Neelam Pandey reports. Here's your colony category | Boosting reveue | Steep hike | Rising cost

delhi Updated: Dec 09, 2010 01:11 IST
Neelam Pandey

It doesn't matter if you are a property owner or a tenant, living in Delhi is soon going to cost you more.

The MCD is proposing to increase tax rate on residential and commercial properties by 5%, which effectively means an overall increase of 50% in the amount paid.

As far as residential properties are concerned, a house owner in New Friends Colony in south Delhi who has been paying property tax of Rs 25,000 per year will now have to shell out Rs 35,500 a year, which is an increase of 41%. Steep hike

Justifying the increase in property tax, MCD commissioner KS Mehra said the civic body has been facing a financial crisis and property tax is one of the major sources of revenue. It needs to pay contractors Rs 686.30 crore for a number of works carried out by them. Rising cost

"The MCD has a huge debt of Rs 2,867 crore to pay to the Delhi government,” said Mehra.

Property owners claim that they will have no option but to increase the rent to make up for the hike. “If my property tax will increase by 50%, I will have no other option but to charge extra from the tenants. How else am I going to cover up the loss?" asked Rakesh Singh, a resident of GK I.

This proposal will be discussed in the standing committee meeting to be held in January 2011. After several discussions and meetings, a final budget will be tabled in the MCD House in February and if approved, it will be implemented from April 2011.

Last year too, though the MCD commissioner had proposed a hike of 5 % in tax rates, the standing committee of the MCD had reduced it to three percent for category A and B, two percent for category C, D, E and one percent for category F, G and H.

The entire MCD area has been divided into eight categories — A to H — as far as levying tax is concerned. Category A comprises upscale colonies that pay the highest amount of tax and category H includes rural areas which pays the lowest amount. Here's your colony category

Mehra said he has also requested standing committee chairman to accept recommendations of the Municipal Valuation Committee (MVC) formed by the Delhi government. The MVC had suggested re-categorising of a number of colonies and bringing of more properties under category A.

According to sources, the MCD cannot reject the suggestions as it had rejected the report in 2007, making it mandatory for it to accept the report now. This means a lot of property owners will have to shell out more money if their colony is upgraded. The committee has suggested upgrade of 168-odd colonies.

However, the political brass of the BJP-led MCD claimed that it will not increase the tax rates. According to sources, with MCD elections scheduled to be held in 2012 the BJP is wary of increasing the tax rates.

Immediately after the commissioner finished his speech, his proposal was rejected outright by standing committee chairman Yogender Chandolia. “As the chairman of the standing committee, I reject the proposal to increase the house tax,” he said.

However, Mehra still claimed that the proposal will be discussed in January and tax rates will be increased.

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