Farmhouses in the city will no longer get property tax exemptions in the name of ‘agricultural land’ as most of them earn their revenue by giving out land for wedding parties and other functions.
Depending on the area, the removal of exemption will lead to a two to three fold increase in the property tax levied on farmhouses — both commercial and residential.
South Delhi farmhouses have been asked to cough up more tax than their counterparts in other parts of the city.
Following the removal of exemption, a farmhouse that has been paying Rs 30,000 tax annually, will now have to pay Rs 75,000. There are more than 3,800 farmhouses in the city, out of 3,000 are in the south and Narela zones.
Areas such as Kaspashera, Sainik Farms, Chattarpur, Fatehpur Beri, Palla and Bakhtawarpur house the most number of farmhouses, and are sought-after for hosting weddings and other ceremonies.
The revenue collection from these properties of erstwhile MCD was Rs 18 crore in 2011-12, though a total of Rs 25 crore was recovered in 2010-11.
“There was no exemption on open farmhouse land even earlier, but due to a misunderstanding, taxes were being levied only for the built-up area and the garden. We have corrected the mistake this year and we hope to improve our revenue by several crores,” said a senior official of North Delhi Municipal Corporation (NDMC).
According to him, the new taxes won’t pinch farmhouse owners since their annual property tax of Rs 75,000 will equal what they charge for functions in a single day.
With the Unit Area Method (UAM) applicable in municipal corporation areas, the official said they would carefully scrutinise tax returns filed to ascertain if the tax for open spaces was being paid.
“Under UAM, tax payers calculate their own taxes, so some may try to fleece us by quoting the wrong amount. The civic bodies — North and South Corporations — will scrutinise the property tax return filed and demand the correct payment from owners,” added the official.
South and Central zone will pay the highest taxes followed by Najafgarh and West zone.