Delhi: A hike in property tax likely

The 5th MVC has proposed a uniform 37% increase in the base unit area value of the properties and changes in other factors used to calculate the property tax

New Delhi: Property tax in Delhi may go up if the Municipal Corporation of Delhi (MCD) adopts the recommendations by a key panel that has proposed changes in the factors used to calculate the levy the civic body. The panel’s recommendations were put up in the public domain on Wednesday for getting public feedback, a senior MCD officials said.

The municipal valuation committee has recommended changes to the factors that used to calculate (Sanchit Khanna/HT)

The fifth Municipal Valuation Committee (MVC), constituted under the Delhi Municipal Corporation Act, make recommendations to the civic body on matters relating to classification of vacant land, properties and colonies and fixing base value per unit area and other factors to calculate property tax. MVCs are expected to be constituted after every three years. However, some delays have been observed in past. This is fifth such panel since 2004.

The current five-member panel was constituted on October 5, 2021, under the chairmanship of Anindo Majumdar a retired IAS officer along with four other members. The recommendations need to be approved by the corporation before they come into force.

MVCs have recommended revision of property tax rates in the city in the past too, but they used to be shot down by the elected house of councillors. This time, however, since a Centre-appointed special officer is helming the corporation after three civic bodies were unified in May this year, the recommendations may be adopted by the MCD, officials said. The special officer has been appointed to represent the deliberative wing (the elected house) till fresh elections are held.

Key proposals

A senior official aware of the latest recommendations said that the 5th MVC has proposed a uniform 37% increase in the base unit area value of the properties and changes in other factors used to calculate the property tax.

Currently, the corporation uses six factors to calculate the annual value of a property --- total covered area, unit area value (rupees per square metre), age, occupancy, structure and use. This annual value is then multiplied by the property tax rate to arrive at the annual levy.

A senior MCD official explained that the unit area values are fixed on the basis of the classification of various residential colonies in the city. Under the existing system, the unit area value for an A category colony such as Panchsheel Park or Sunder Nagar is ₹630 per sqm; for a B category colony such as Pamposh enclave, it is Rs500; for a C category colony such as Saket or Sukhdev Vihar, it is ₹400; for a D category colony such as Anand Vihar, it’s ₹320;for an E category colony such as Chandni Chowk or Bhogal, the unit value is ₹270; for an F category colony such as Inderlok, the value is 230; for a G category area such as Aya Nagar, the value is fixed at ₹200 and for H category colonies such as Mustafabad or Madanpur Dabas the base value stands at ₹100 per square metre.

An MCD official said that the colonies are categorized based on the level of infrastructure, amenities and other services with A category colonies being at the top of the spectrum.

If an increase in the base unit area of 37% is adopted, at the current property tax rates, the levy in areas such as Shanti Niketan and Maharani Bagh (A category colonies) for a property with 100 sqm covered area-- keeping all other multiplicative factors constant--may go up from ₹7560 to ₹10,320 , and in C category areas like East of Kailash and Civil Lines areas, it may go up from ₹4400 to ₹6050.

In the interim report, the panel has argued that the base unit area values were recommended by the 1st MVC in 2004, and it has remained unchanged in the last 18 years. “Studying the trends of inflation using various indices, the committee has recommended increasing the Base Unit Area Value (UAV) by 37% which otherwise is small compared to inflation during the last 18 years. There has been no change in the UAV of the colonies, whereas capital value and rental value of land has increased many folds during the past 18 years,” the report said.

The panel, however, has not recommended any change in the current categorisation of colonies. However, considering the upgrade and changes in recent times in the city, the 5th MVC has recommended that the area under the airports authority, including Aerocity would now be categorised as a separate category.

Other changes

In its report, the panel also claims to simplify the property tax assessment process.

Among the other five factors which are used to calculate annual value along with unit area value,the annual property value is calculated by multiplying the unit area value by total covered area or built up area; the age of the property, occupancy factor which is based on whether the property is self-occupied or rented, its structure (whether it’s pucca, semi-pucca or kutcha) and it’s use which means if a property is residential, commercial, or being used to run a hotel, educational institution, etc.

A second MCD official said the MVC has recommended that the structure factor for both semi-pucca and kutcha buildings should be the same, 0.7, instead of the current 0.7 for the former and 0.5 for the latter.

“The value for pucca structure will remain unchanged at 1. To determine the age factor, the committee has proposed values of 1.1 and 1.2 for structures built from 2010 to 2019 and 2020 to 2029 respectively,” the official said. The rate for properties that came up before 2010 will remain the same.

The report also recommended use of technology such as GIS Mapping , faceless assessment and block chain technologies to administer property tax. “To encourage sustainable and scientific disposal of solid waste in the city, the committee recommends 5% rebate to such colonies/societies for disposal of 100% wet waste throughout the year,” it adds. The 5% incentive had been announced in July 2022 under the Sahbhagita incentives.

A spokesperson for MCD said that the interim report has been uploaded on the website of the corporation mcdonline.nic.in. “The objections can be given within 30 days of the notice at the email id:- mvc5.sdmc@mcd.nic.in; or physically at the office of chairman, 5th municipal valuations committee, Ambedkar Stadium Office Complex, Delhi Gate,” the spokesperson added.

Atul Goyal, who heads RWA collective URJA (United Residents Joint Action) said that any increase in property tax will be a punishment to the people who are already paying several taxes. “One-third of the city is paying property taxes and cross-subsidising services for the other 2/3rd of the city. Their focus should be on increasing the number of properties that pay tax. Honest tax payers should not be punished,” he added, referring to several colonies that are out of the property tax ambit.