After MCD unification, a uniform property tax for Delhi

The Municipal Corporation of Delhi (MCD) has approved a new property tax regime for the national capital residents, to bring about uniformity in taxes after the unification of the three municipal corporations. The new rates will come into effect from July 16, 2022, officials said, adding that while rates have by and large remained the same for residents of south Delhi, those in north and east Delhi will have to pay an additional 1% education cess.

The civic body also plans to provide up to 15% tax incentives to residents’ welfare associations (RWAs) ensuring 100% waste segregation, decentralized processing of municipal waste, and increased property tax collection from their colonies.

Launching the ‘Sahbhagita (partnership)’ scheme on Monday, to make RWAs partners in tax collection and waste management, Lieutenant Governor VK Saxena said the scheme will incentivise RWAs to achieve at least 90% tax collection in their colonies. The RWAs will also have a say in development work amounting to 10% of tax collected or up to 1 lakh, Saxena said.

“An incentive of 5% of the tax paid shall be available if the colony concerned implements 100% waste segregation at source, composting of wet waste and only hand over the dry waste to the MCD or its authorised agencies,” a municipal official said.

The proposal cleared by MCD also states that if an RWA is unable to recommend a development work that it needs executed, then MCD may release the incentive to the taxpayer as a cash transfer.

Atul Goel, who heads URJA United RWAs Joint Action, a collective body of RWAs, said while the incentives are well intended, the corporation will first have to recognise RWAs; otherwise it would lead to more conflicts. “How will they deal with multiple RWAs operating in a particular area? This needs in-depth clarity; otherwise the policy will fail,” he said.

Delhi currently lacks a mechanism to recognise RWAs in each area and hold elections.

BS Vohra, who heads East Delhi RWA joint front, said, “Besides a legal framework to recognise the RWAs based on their registration date or other factors, MCD should consider that many areas do not have space for carrying out waste processing/composting. An amount of 1 lakh is too little — even drains can’t be laid with that amount. RWAs are doing social work and its is the MCD’s job to provide basic amenities.”

He also said bringing taxes on par with south Delhi only makes sense if similar services and infrastructure are also provided in north and east Delhi.

An MCD spokesperson said the RWAs will have to register with the corporation’s property tax department to be a part of the scheme and a detailed policy in this regard will be released soon.

On the 1% educational cess, the proposal by municipal commissioner Gyanesh Bharti said, “Since the education cess has already been implemented by the (erstwhile) south corporation, it may be implemented in entire unified MCD at 1% of annual property tax. This would be reasonable as the implication to taxpayer will be very small.”

Post unification, the north and east Delhi areas are now increasingly being subjected to the regulations and norms of south Delhi.

Under the current property tax calculation matrix, MCD uses six factors to calculate the annual value of a property–total covered area, unit area values (rupees per square metre), age, occupancy, structure and use.

This value is multiplied by the property tax rate to arrive at annual property tax. MCD has decided to continue with the tax rates prevalent in the three corporations with residential properties in categories A and B to be charged 12%, 11% for residential colonies of categories C, D and E; and 7% for properties in categories E, F and G categories.

The unit area values have remained unchanged but rates will be examined by the fifth municipal valuation committee, constituted last November, MCD said. This means that tax payers can expect another round of revisions and hikes after the panel submits its report.

MCD has also tightened the norms used for providing rebates. Currently, a 15% rebate is offered on a lump-sum payment of property tax till the first quarter of the fiscal (June 30). This will now be capped at 10%, MCD said.

While senior citizens, women, differently abled and retired soldiers currently get a 30% rebate on their property tax if the property is for self-use, they will now be eligible for this rebate only if the property is less than 100 square metres.

Apart from that, to promote digital payments, incentive at the rate of 2% of property tax will continue but its maximum limit will be 200, officials aware of the matter said.