MCD proposes 5 per cent hike in property tax

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.