MCD proposes to hike levy on selling, buying property in Delhi

Amit Kumar, spokesperson for the unified MCD, said the proposal to increase the transfer duty was approved during the first joint meeting held for policy decisions by the special officer and the municipal commissioner of the unified MCD on Tuesday.

Purchase of properties in Delhi may get costlier in the coming days as the unified Municipal Corporation of Delhi (MCD) has approved a one percentage point increase on transfer duty -- tax applicable on sale of immovable property -- for purchases valuing over ₹25 lakh. Officials said the proposal, which suggests increasing the transfer duty for male buyers from 3% to 4% and for female buyers from 2% to 3%, has to be cleared by the Delhi government before it is implemented on the ground.

What is transfer duty?

Amit Kumar, spokesperson for the unified MCD, said the proposal to increase the transfer duty was approved during the first joint meeting held for policy decisions by the special officer and the municipal commissioner of the unified MCD on Tuesday. “Transfer duty hike is the first major policy decision taken after the unification of the north, east and south corporations into a unified MCD on May 22 this year,” said a senior MCD official.

While such finance related policy matters are first taken up by the standing committee and subsequently require the consent of the house of councillors, the powers of both standing committee as well as the house are vested in the special officer till elections are held and councillors elected.

The transfer duty on immovable properties is calculated against the registered sale value of the property. Besides the property tax collection, the transfer duty constitutes one of the biggest sources of income sources for the municipal corporation. The increase, if implemented, is likely to increase the total transfer duty collection from existing approximately ₹1,500 crore to ₹1,900 crore.

A senior MCD official said that the transfer duty increase proposal will now be sent to the divisional commissioner of the Delhi government for implementation.

Delhi government spokespersons did not respond to requests seeking a comment.

Civic officials said that there will be no change in transfer duty for properties which have a registered value of less than ₹25 lakh. “The transfer duty has not been increased in the last decade and the corporation has the power to levy up to 5% transfer duty,” said an official.

Past attempts

Both the erstwhile South and North corporations have earlier attempted to increase the transfer duty by one percentage points in the past but the proposals remained stuck at the Delhi government level.

In September 2020, the erstwhile South Delhi Municipal Corporation’s house of councillors had approved the proposal moved by commissioner Gyanesh Bharti (now the commissioner of the unified MCD) to increase the transfer duty by one percentage point. The hike was never implemented and remained stuck at the Delhi government level.

A senior municipal functionary said that the ongoing financial crisis was one of the key reasons behind the unification of three municipal corporations and various steps are being explored to increase the internal revenue collection of the unified MCD.

“East MCD had never approved the proposal for increase in transfer duty. The current move also aims to bring uniformity across three corporation in terms of stated policy,” an official said.