NDMC taxation to fall in line with rest of city

According to NDMC officials, the bill proposes completely shifting to the unit area method (UAM) of property tax assessment, long used by MCD

The Union government on Monday introduced the Jan Vishwas (Amendment of Provisions) Bill, 2025, in the Lok Sabha, proposing amendments to 288 provisions across 16 laws, including 47 provisions of the New Delhi Municipal Council (NDMC) Act, 1994. A key measure under it is the overhaul of the property tax system in New Delhi, bringing it in line with the Municipal Corporation of Delhi (MCD).

Under UAM, tax is calculated based on the unit area value per square metre, which varies by category of colony, age of property, occupancy, and structure type. (Reuters)

Citing an archaic legal provision in the Delhi Municipal Corporation act, Prime Minister Narendra Modi on Sunday raised questions on the opposition’s claims of working for social justice and stated that Delhi Municipal Corporation Act, 1957, had a provision of sending sanitation workers to jail for a month if they did not show up for work without prior information. He attacked opposition parties for retaining oppressive laws for decades before he came and started repealing them.

According to NDMC officials, the bill proposes completely shifting to the unit area method (UAM) of property tax assessment, long used by MCD. “The most significant change in overhaul of the property tax system in New Delhi. Once the act is implemented, New Delhi will also have a unit area method (UAM) of property tax assessment like MCD. This will help in reducing the annual disputes and sealing drives observed in areas like Connaught Place and Khan Market,” an NDMC official, who asked not to be identified, explained.

Under UAM, tax is calculated based on the unit area value per square metre, which varies by category of colony, age of property, occupancy, and structure type.

NDMC, on the other hand, calculates property tax through assessments based on property records and ground surveys. Taxpayers may review the assessment list and file objections, after which revised assessments are carried out.

By contrast, MCD follows self-assessment and unit area method to calculate tax whereby taxpayers conduct self-assessments since April 2004. MCD’s formula used for calculation of tax depends on unit area value (per sq metre) depending on the category of area/colony, area, age, structure and occupancy.

The shift in NDMC has a long and contentious history. In April 2009, NDMC attempted to introduce UAM, but trade associations challenged the move in court, arguing that the NDMC Act would first need parliamentary amendment.

The courts allowed those who had voluntarily adopted UAM to continue under it, while the rest remained on the older system based largely on actual and comparable rents.

The Jan Vishwas Bill, which has been referred to the select committee, seeks to resolve this conflict by legally empowering NDMC to adopt UAM. It also proposes setting up a municipal valuation committee (MVC) to study and categorise areas in Lutyens’ Delhi before the new system is rolled out.

“Even after Parliament passes the bill, the MVC process will take considerable time. Their recommendations will have to be cleared by NDMC, and only then can the new system be implemented,” said an NDMC official, requesting anonymity.

Officials believe the reform will bring greater transparency and predictability to NDMC’s property tax regime. “Once implemented, it will minimise disputes and streamline collections, just as it has in MCD areas,” the official added.

The disputes over the old tax assessment method based on Rent value emerge every year towards the end of financial year when a sealing drive is carried out by tax department teams targeting key properties in major New Delhi commercial hubs.

NDMC governs roughly 15,600 properties, including around 14,000 private properties and 1,600 government-owned ones. Of these, about 1,000 properties are tax-exempt. Property tax revenue for NDMC area rose from ₹1,026 crore in 2023-24 to at least ₹1,045 crore in 2024-25, largely due to increased collections from private properties. For the current financial year, NDMC has set a target of ₹1,150 crore in property tax collections—up from ₹1,030 crore collected the previous year.

New Delhi Traders Association president Atul Bhargava said that MCD already has a unit area method and self assessment. “The system in MCD is transparent and a reasonable amount of tax is charged. In New Delhi some shops are on deemed rent method and process is arbitrary. The change has been long overdue since 2004. We will welcome the day when the bill is passed,” he added.