SDMC introduces professional tax, doubles levy on rented commercial property
The South Delhi Municipal Corporation (SDMC) on Monday passed the proposal to levy a professional tax on self-employed persons — a first for Delhi — and doubled the tax on rented commercial property. The municipal body also announced hike in tax on transfer of property in new tax proposals aimed at ramping up revenue collection hit by the national lockdown to contain spread of coronavirus disease (Covid-19).
The Aam Aadmi Party, which is in the Opposition in the SDMC House, threatened to launch an agitation against the move and called the introduction of a new tax and hike in other levies “inhuman”. AAP Delhi convenor and cabinet minister Gopal Rai said the move exposes the “anti-people mindset” of the BJP. He said the BJP should immediately release a white paper on the money spent by the municipal corporations.
An SDMC officials said the professional tax would be levied on self-employed professionals such as doctors, lawyers, chartered accountants and architects, etc and those working in private firms for using civic amenities. As per the proposed tax slabs (see graphic), those earning less than Rs 50,000 per month won’t be taxed.
Since it is a new tax, the proposal will now have to be cleared by the Delhi government before it is implemented.
The SDMC House also approved the proposal to double the property tax on rented commercial property as per the recommendations of the municipal valuation committee-3 (MVC-3). The amount of tax will depend on the location of the property. “Under SDMC jurisdiction, there are around 9,000 to 10,000 commercial properties that have been rented out. So we hope to generate a revenue of Rs 90 crore to Rs 100 crore per annum. The move will not impact residential and commercial properties that are being run by the owners,” said Narendra Chawla, leader of the house in SDMC.
For instance, the current commercial tax payable by a 83.6-square metre shop in a locality such as Defence Colony or South Extension is Rs 25,333. But if the shop is a rented property, then the owner will now have to pay Rs 50,666 as tax.
The SDMC House, however, deferred the proposal to increase the electricity tax from the current 5% on the bill amount to 6%.
The South corporation also approved hike in the tax on transfer of property. SDMC officials explained that the hike would be applicable on only those properties that have a circle rate of more than Rs 25 lakh. As per the new proposal, the transfer duty will now go up to 4%in case of male buyers from the current 3%; and to 3% from the current 2% for female buyers.
“We hope to generate Rs 20 crore additional revenue with this move. We are not able to pay our doctors, engineers, sanitation workers, teachers, etc due to fund crunch. We have been compelled to take these tough steps as the Delhi government did not pay us our due amount of Rs 1300 crore as per fifth finance commission recommendations,” Chawla said.
Senior AAP leader Durgesh Pathak, however, said the Delhi government owes no dues to the municipal bodies. He said the corporations in fact are receiving more money from the Delhi government under the AAP dispensation.
The SDMC has also announced waiver of property tax for residents of unauthorised colonies between 2004 and 2018, if they pay house tax dues for 2019-20 and 2020-21.
Anamika Mithilesh, SDMC mayor, said, “Due to Covid-19 pandemic, our financial condition has worsened, so we have decided to levy professional tax and hike tax rates in certain other categories. Professional tax will bring additional revenue of Rs 25 crore to the cash-strapped SDMC.”
Professionals working in south Delhi, however, said that it would put additional burden on their pockets.
“During the Covid-19 crisis, any additional tax will make hit the professionals hard since they are already reeling under pay cuts and job losses. Authorities at this juncture should be announcing allowances for them and schemes to help their businesses. The decision to levy a professional tax at this juncture is irrational,” said Shaunali Nanda, an architect, who runs an interior design business in Andrews Ganj.
Dr Akanksha Singh, a gynaecologist who has a clinic in Lajpat Nagar, also criticised the move and said that when people were already struggling to pay so many different taxes, a new tax makes no sense.
“Coronavirus pandemic has already broken the backbone of many professionals be it self-employed people or the service class. People are going through a lot of problems due to Covid-19 and imposing one more tax will only make things worse. They levy tax but do not do their job properly which is evident in Delhi roads get flooding every monsoon. Who is responsible for this?” she said.
The new tax proposals triggered a political slugfest in the BJP-ruled corporation.
The AAP threatened to take to the streets to protest the SDMC’s decision. Addressing a digital press conference, senior AAP leader Durgesh Pathak and Sangam Vihar MLA Dinesh Mohaniya said SDMC went ahead with the ‘triple tax burden’ despite Delhi BJP chief Adesh Gupta assuring on Sunday that no taxes would be increased.
“The SDMC’s decision to impose three new taxes today is a price people will pay for the corruption of BJP councillors. Yesterday we opposed the BJP-ruled SDMC’s decision to hike taxes. The BJP wanted to increase professional tax, tax of residents of unauthorised colonies, property transfer tax and electricity tax. After strong opposition from AAP, Delhi BJP chief Adesh Gupta intervened and tweeted he had spoken to the SDMC mayor and requested him to withdraw the tax hike proposals. But unfortunately, today, the tax proposals were accepted. This means now the people of South Delhi will have to pay extra tax to SDMC,” Pathak said.
Mithilesh said the professional tax slabs and 1% increase in transfer duty had been designed in a manner that it would not cost trouble the public. “We have taken these initiatives to increase our revenue so that we can pay our employees and serve better. Due to the pandemic, our financial condition has worsened and we are unable to pay our employees. AAP believes in blame-game politics. If AAP is so concerned about taxes, they should ask their government to clear our dues so that the corporations can function properly,” she said.
Delhi BJP chief Adesh Gupta did not reply to the calls and text message sent to him for comment on the matter.
Mohaniya said when the BJP came up with the tax proposal, the Congress supported the decision inside the house whereas AAP immediately staged a walkout.
In response, the Congress called AAP a ‘B-Team of the BJP’. Abhishek Dutt, vice-president of the Delhi Pradesh Congress Committee said, “AAP is the B-team of the BJP. The AAP councillors walked out because they knew it very well that by walking out, the agenda will be passed. In fact, the Congress’ councillors stood in the House till the very end and objected to all agenda points.”