Gurugram civic body reduces prices of properties for auction

After the latest e-auction of the 21 properties on August 21 also failed to get a bid, MCG officials decided to rethink their approach.

After failing to auction properties of tax defaulters in repeated attempts, the Municipal Corporation of Gurugram (MCG) has slashed the reserve price of these properties by at least 95% for an upcoming auction on September 7, officials said on Thursday.

An aerial view of Gurugram. (Parveen Kumar/Hindustan Times)

Since January, the MCG has been trying to auction commercial and industrial properties of tax defaulters. However, they did not receive a single bid in any of the five auctions held.

After the latest e-auction of the 21 properties on August 21 also failed to get a bid, MCG officials decided to rethink their approach.

Dinesh Kumar, zonal taxation officer, said that the high reserve price was dissuading bidders from bidding, prompting the MCG to slash the reserve price by a huge margin for the next e-auction. The MCG will auction 25 properties this time.

For instance, a commercial property in Sector 50, which had a reserve price of Rs.1.36 crore during previous auctions, will now be auctioned at a reserve price of Rs. 4.91 lakh.

“After repeated failed attempts, we reached out to potential buyers to determine the exact cause for the lack of a bid. We found that the reserve price, which had been set as per circle rates, were extremely high, and hence, no one was bidding. After consulting with MCG commissioner Amit Khatri, the decision to slash the reserve prices by a huge margin was taken, to attract bidders,” said Kumar.

Property tax is MCG’s main source of revenue. After netting just Rs.196 crore in property tax in the 2018-19 fiscal, a drop from the collection of Rs.342.24 crore the fiscal before, the MCG has been attempting to auction properties to reduce its deficit.

Kumar said that after a property is sold to the highest bidder, the MCG will deduct the property tax owed by the original owner and add it to the civic body’s cash reserves. The remaining amount, he said, would be given to the original owner of the property.

For example, if a property is auctioned for Rs. 1 crore and the original owner owed MCG Rs. 10 lakh in property tax dues, the MCG will subtract Rs. 10 lakh from the auction amount, while the defaulter will receive Rs. 90 lakh.

According to MCG officials, the auction will be conducted online through https://mcg.c1auctions.com.

For participating in the auction, one will need to register with the MCG at the e-auction portal and pay a non-refundable fee of Rs. 1,000 online, as the annual registration fee.

After registration, bidders need to pay the mentioned Earnest Money Deposit (EMD) and a processing fee of Rs. 2,500 for each property.

“Fifty per cent of the bid amount will have to be deposited by the auction winners within 24 hours to the MCG’s bank account. The remaining 50% needs to be paid within 15 days from the date of the auction, failing which the money already paid will be forfeited and the property will be reclaimed by the MCG,” said Kumar.

MCG officials said that the EMD can be deposited starting 10am on September 4 until 5pm on September 6.

The auction will commence at 10am on September 7 and end at 4pm on the same day.

The MCG has been auctioning properties of property tax defaulters since November 2017.