Property tax in Delhi on new parameters
A new set of rules have been designed for the collection of property tax in Delhi by the Municipal Corporation, after its trifurcation into North Delhi Municipal Corporation, South Delhi Municipal Corporation and East Delhi Municipal Corporation. The property taxes for colonies categorized under the different corporations would be now collected by the Commissioner of the respective municipal corporations. As per reports, the property tax returns in respect of properties falling under one Municipal Corporation will be received only within the same Municipal Corporation.
Property Tax
The Municipal Corporation of Delhi earns a part of its revenues through property taxes. The same is collected in order to meet its civic obligations, by levying property tax on all land and buildings under its jurisdiction. As stated in the DMC Act , the property tax in Delhi would constitute a general tax between 10-30 percent of the rate-able value of lands and buildings within the urban areas and on all land and buildings within the rural areas at rates determined by the Corporation.
On all buildings that run trade or business, higher levels of tax rates are applicable. Earlier, properties were taxed on the basis of annual rent at which land and buildings could reasonably be expected to be let out on a yearly basis. Since the system was questionable on various grounds like inequity, wide disparity in property tax of properties in the same locality, subjectivity in assessments and excessive litigation, it was replaced by the system of Unit Area Method of property tax, from April 2004.
Calculation of Property Tax
The Municipal Corporation Delhi area is classified into seven categories of areas/colonies/localities from ‘A’ to ‘H.’ Parameters like settlement pattern, access to infrastructure, land prices and purpose for which the land/ building are used for this categorisation. Unit areas of different categories are predefined. In cases where different portions are put to different uses, annual value is calculated for each portion separately. In the tax calculated, rebates or concessions are deducted from the total value.
Some of the areas fall under which categories (from A to H) are given below :
A- Kalindi Colony, Panchshila Park, Pushpa Bhavan , Sri Fort Bunglows
B- Defence Colony, Green Park Extn., Greater Kailash
C – Kalkaji , Som Vihar
D – Ambika Vihar , South patel Nagar
E – Ajmere Gate, Gyan Kunj
F- Air India Colony, Amar Mohalia, Gandhi Vihar
G- Ghogha, Gheora Extn.Colony
H – Alipur , Sultanpur Dabas
The rate of a property depends upon certain things such as the stamp duty, ready reckoner and the property tax rate. With the new budget formed annually, the rates of stamp duty and the property tax are revised on a yearly basis. Construction user and age are other categories which decide the rate of property tax in a region. The same have different weights, which are multiplied with the capital value of the property and the current property tax rate, to calculate the property tax.
Residential rates of the government ready reckoner of the ward and zone in which the property is located is used to calculate the market value of any property including offices, vacant land and industrial premises. The Ready Reckoner provides the rates of build-up area per sq.meter, and the same is used for carpet area.
Property tax can be easily calculated using the calculator based on capital value system. One can also get an estimate on the property tax due for a specific year, by following the steps given below :
a)Calculate the capital value of the property by multiplying the market value of the property to the total carpet area, multiplied by the weights for type of construction, multiplied by weights for age of the premise.
b) Take the capital value of the property and multiply it by the current property tax rate and weight for user category.
Property tax in Delhi
As per Municipal Corporation of Delhi, the property tax in Delhi has been decided as given below :
| SI No. | Property Use | Factor | A | B | C | D | E | F | G | H | Status |
| 1 | All shops/offices & other non-residential units. Showrooms having covered area 100 sq.mtrs. & above | 4 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | A |
| 2 | Business- Self Occupied/Tenanted-100 sq.mtrs.and above | 4 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | A |
| 3 | Hotels – 3 stars and above | 10 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | A |
| 5 | Malls/Establishments popularly known as Malls | 4 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | A |
| 7 | Residential | 1 | 12 | 12 | 11 | 11 | 11 | 7 | 7 | 7 | A |
| 10 | Religious Institution – 100 sq.mtrs. and above | 1 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | A |
Measures to improve new property tax
The new property tax can be improved by a number of ways. Some of them are :
a) The base should be relatively immobile to allow the local authorities to vary the rates without losing the base.
b) The tax should yield adequate revenues to meet local needs and should be sufficiently buoyant over time.
c) The tax should be stable and predictable over time.
d) It should not be possible to export the tax burden to non-residents except to the extent to the extent that such burdens capture benefits non-residents obtain from local services.
e) The taxpayers should perceive the tax to be reasonably fair.
f) The tax should be relatively easy to administer.
