The Hindu     09.12.2010

MCD proposes 5 per cent hike in property tax

NEW DELHI: Citing its burgeoning debt of Rs.2,867 crore and the need to revamp its financial management and generate additional revenue, the Municipal Corporation of Delhi has proposed a hike of 5 per cent in property tax rates across all categories while presenting the annual budget of Rs.6,364.43 crore on Wednesday for the year 2011-12.

The proposal was announced by Municipal Commissioner K. S. Mehra in his budget speech unveiled at a special meeting of the MCD Standing Committee where he mentioned that the civic body would be focussing mainly on green initiatives, roads, parking projects, education and health facility improvement for the coming fiscal year.

The MCD has divided properties into eight categories on the basis of their location but the property tax rates are proposed to be increased by 5 per cent uniformly in all categories except the Airports Authority of India properties, non-residential farmhouses and special non-residential properties.

The Commissioner proposed an increase in tax rates from existing 12 per cent to 17 per cent for A and B categories, from 11 per cent to 16 for C, D and E categories and from 7 per cent to 12 per cent for F, G and H categories. “No change is proposed for special non-residential properties like hotels of three-star and above, malls, AC gyms and clubs with swimming pools as they are already giving the highest 20 per cent tax,” he added.

The Commissioner also said the rebate on timely payment of tax is proposed to be reduced to 10 per cent from 15 per cent and there would be no additional rebate on properties up to covered area of 100 square metres, Co-operative Group Housing Societies and aided schools.

The proposal to hike property tax rate was, however, met with stiff opposition by the BJP-ruled MCD with the Standing Committee chairman Yogender Chandolia stating that instead of hiking the property tax, the existing tax net should be widened.

“We have rejected this proposal and will ensure that the public is not burdened with this additional tax. Due to our failure, out of a total of about 30 lakh properties in Delhi we have been able to recover tax from only about nine lakh properties so if we are able to recover tax dues from the remaining 21 lakh properties there would be no need to hike the house tax rates. There are 4,816 properties which have already been identified for being liable to pay Rs.5 lakh in tax per year and by targeting them we can get Rs.712 crore to meet our deficit,” he added.

Hopeful

Addressing the media, the Commissioner, however, expressed hoped that the proposal for tax hike would be accepted.

Mr. Mehra said: “The MCD is intensifying efforts to widen the tax base while urging the key panel to accept the recommendations of the Municipal Valuation Committee which had suggested bringing more properties under A category. ”

Leader of Opposition from the Congress J. K .Sharma dubbed the budget as a “deficit budget” and criticised the proposed property tax hike.