Before we get into the details of property tax in Delhi, we request our readers to go through our article on ‘BBMP property tax’ wherein we have discussed introduction of property tax in general and also tax benefits.
With that background, we straight away start discussion on property tax in Delhi.
1. Introduction to MCD property tax
Property tax are the principal source of revenue of urban local bodies/local municipal authorities to maintain the basic civic services in the city. As property tax administration is delegated to municipalities within the state, owners of properties in Delhi are liable to pay property tax to Delhi Municipality body called Municipal Corporation of Delhi (MCD) every year.
Studies show that property tax base in developing countries has been declining due to lack of proper information, inefficient administration and procedural inadequacies. Therefore, MCD wishes to achieve its objective of providing transparent, accountable and efficient citizen-centric services to the citizens of Delhi through the use of Information Technology. Property tax division of MCD has initiated an innovative, broad based approach of Public-Private Partnership (PPP model).
MCD levies property tax on all buildings including vacant land. Out of the three methods of computing property tax (i.e., Annual Rental Value, Capital Value System, Unit Area System), MCD chose to adopt Unit Area System which is also recommended by Government of India. Property tax in case of Unit Area System is a function of the built up area, the period of construction, the structure of building, location of property and use of property. While computation method is same for all kinds of properties, property tax rate varies for residential, rented residential, commercial, industrial properties.
MCD is divided into North MCD, South MCD and East MCD. Further, the entire city of Delhi is divided into eight categories from A to H based on the value of properties in the colonies belonging to each of these categories.
2. Formula for MCD property tax computation
Property tax = Annual Value * Rate of tax
Annual Value for building is arrived at as follows:
Unit area value per sq metre * covered area of property * Age factor * Use factor * Structure factor * Occupancy factor * Flat factor
- Unit area value per sq metre is the value per sq metre of the built up area of the property based on category it belongs to
- Covered area of property is total floor area in all the floor thereof, including the thickness of walls, space of covered verandah and courtyard, gangway, garage, common service area, staircase, and balcony including any area projected beyond the plot boundary and such other prescribed space
- Age factor is ranges from 0.5 to 1 based on the age of the property. New properties are taxed higher compared to older ones
- Use factor is the factor assigned by MCD based on the usage of property
- Structure factor depends on the construction. For eg. RCC construction
- Occupancy factor depends on whether property is self occupied or rented out
- Annual value for the vacant land is computed by using the below formula:
Unit area value per sq metre * area of vacant land * Use factor * Occupancy factor * 0.3
Unit Area System is a simple arithmetical system of calculation of annual value based on covered area of building /the vacant land by the unit rate for the category in which the building or vacant land is located. Overall property tax in Delhi is tax rate multiplied with value of property (arrived at considering total area, value per sq metre, age, use, structure and occupancy factor)
Delhi Government appoints a Municipal Valuation Committee to determine categorization of colonies, unit rate for each colony and the multiplication factors. Refer here for use factor and rate of tax for various categories of properties.
It may be noted that if different portion of building are put to different uses or the building has been constructed in stages, annual value needs to be computed for each such portion separately.
3. Due date, penalty and other rewards
- Entire property tax paid in one lumpsum before first quarter is given a rebate of 15% on total tax
- Any delay in the payment of property tax will attract penal interest @ 1% for every month of delay
4. Steps for payment of MCD property tax
Payment online can be made using property ID allotted to the property which can be obtained from previous property tax paid receipt.
- Click here and choose whether property tax need to be paid to South MCD, North MCD or East MCD
- Check the box for agreeing to the terms and conditions and click on ‘Click here to file property tax _____ (year)’
- Choose to enter either property ID for tax paid in 2014-15, any other years and click on ‘Submit’
- In case you do not have property ID allotted, click on ‘Click here to file your return if property ID has not been allotted earlier’
- You will be directed to a page containing property ownership details
- Enter the property details required and automatically compute tax and click on submit
- Pay tax either by using credit/debit card or net banking
- Click on ‘generate challan’ and the official challan will be displayed
The online portal also provides details of property tax arrears and penalties, in addition to calculating late fees and interest amounts.
Payment of property tax offline can be made at any of the ITZ cash counters all across Delhi. Instant receipt is issued after the payment which contains property tax ID.
5. Exemption/Concession from payment of property tax
While we have provided below list of all exemptions / concessions, it may vary depending on whether the property belongs to North, South or East MCD.
- Building or vacant land exclusively occupied and used for public worship, public burial or cremation grounds, heritage lands or buildings or occupied and used by any society or body for charitable purpose
- Agricultural land and building except dwelling houses
- Land or building vested in the corporation in respect of which the property tax be leviable primarily on such corporation
- Property owned by war widow /Gallentry Award winner being permanently used for self residence and no portion is let out
- Property martyred on police/paramilitary duty
- Owned by South MCD employee handicap (fully) on duty
- Award winning in international games
- A concession of 30% is given to Senior citizens, women and physically challenged
- Rebate of 30% to Ex-service men
- Rebate of 20% to group housing flats upto 30th June of financial year
- Rebate of 10% to DDA/CGHS residential upto 100 sq mts of covered/build up area
Conditions for availing concession
- Rebate is applied for a maximum of 200 sq mtrs of total build up/covered area except in case of DDA/CGHS residential which has a different limit
- Occupancy factor/use factor should be residential
- Use factor should be self occupied
- In case of joint owners, rebate will be applied to the property share of owners who are under rebate category