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SDMC proposes to hike property tax, but councillors oppose move
Presenting the budget proposals for 2021-22, SDMC additional commissioner Ramesh Verma said property tax rates have not been raised in the last 10 years.
The South Delhi Municipal Corporation (SDMC) on Monday proposed to hike property tax while planning to change the categories as per which the levy is charged.
Presenting the budget proposals for 2021-22, SDMC additional commissioner Ramesh Verma said property tax rates have not been raised in the last 10 years. “Residential, commercial and business plots of up to 150 square metres are divided into three categories in the city. Since, there had been no hike in property tax in the last 10 years, I propose that in the financial year 2021-22, the number of categories should be reduced to two and 14% tax shall be levied on residential properties of A&B category and 12% on those falling in C-H category,” Verma said, who tabled the proposals on behalf of SDMC commissioner Gyanesh Bharti -- currently recovering from Covid-19.
In the national capital, properties are divided into three categories – A&B, which attracts 12% tax; C,D,E, which attracts 11% tax, and F,G, H, which attracts 7% tax.
According to new tax proposal, these properties will be divided into two categories A & B and C to H. Residents of A & B category colonies will have to pay annual tax of 14% instead of 12% and those residing in areas falling under C-H category will be paying 12% tax instead of 11% and 7%.
A senior SDMC official said that A&B category colonies include upscale neighbourhoods such as Vasant Kunj, Safdarjung Enclave, Defence Colony while C-H category include middle class neighbourhoods such as Bhogal, Amar Colony, Gautam Nagar etc and unauthorised colonies such as Madanpur Khadar, Sangam Vihar, Badarpur among others.
However, the budget proposals are subject to approval from the House, which had previously shot down suggestions to introduce new taxes and hikes.
Civic officials said the executive wing of the civic body had been proposing hike in property tax for last three to four years but these proposals were declined by the deliberative wing (elected representatives) of the corporation.
“Property tax revision is necessary to make the the civic body financially secure, so such moves are required. Under these proposals, those living in posh colonies (A&B category) will have to pay 2% more property tax while the property tax increment for middle class neighbourhoods will be only 1%.
Those living in F,G,H category colonies majority of which are unauthorised colonies will have to pay 5% extra tax. “However, the SDMC hardly gets any property tax from those residing in unauthorised colonies,” a senior SDMC official said.
The SDMC also proposed to levy 1% education cess on annual property tax and also proposed to hike transfer duty tax by 1% to meet the revenue targets. The proposal of increasing transfer duty by 1% was already passed by the civic body in August this year and is now awaiting Delhi government nod.
The budget proposals also demanded to increase tax on commercial properties such as guest houses, lodges, inns, paying guest houses and restaurants without bar to 20% from 15%.
However, the impact of coronavirus pandemic was visible on the budget proposals as no new project was announced by the SDMC in its budget.
SDMC officials said that the revenue collection target for the SDMC from property tax is Rs 1400 crore for 2021-22 financial year. “Due to coronavirus pandemic our property tax collection has gone down this year. We could collect only Rs 670 crore from property tax against our revised target of Rs 1,240 crore. To increase our revenue we must cut our rebates and increase property tax,” the official said.
The budget proposals also recommended to cut down rebate on one-time payment of property tax before June 30 every year to 10% from existing 15%. The proposal also recommended to do away with the 20% rebate given to group housing societies on timely submission of taxes.
The Bharatiya Janata Party (BJP), which rules the three civic bodies in the city, said it would ensure that the public do not suffer due to the budget proposals.
Anamika Mithilesh, SDMC mayor, said these are the budget proposals presented by the commissioner and it is not final. “These proposals will now be discussed in the standing committee and the House meetings of the SDMC. We will amend these proposals regarding tax hike so that there is no burden on the public. We will ensure that the people do not suffer,” she said.
The Opposition, however, objected to the proposals to increase the levy amid the ongoing Covid-19 crisis.
Prem Kumar, leader of opposition in SDMC, said that it was an “anti-people” budget and that the Aam Aadmi Party (AAP) was against the move. “Instead of increasing their revenue targets from parking and advertisement heads, the civic body is planning to tax the people more. We will not let this pass in the House,” Kumar said.
Abhishek Dutt, leader of the Congress in the SDMC, said, “Due to political issues between the BJP and the AAP, funds which are earmarked for the MCD are not being released properly. This is resulting in additional tax burden on the public. There should be no hike in property tax especially amid such a global pandemic. We will strongly oppose this move in the House.”
