The NDMC area houses some of the most high-valued private property in the city.
Over the last three years, the New Delhi Municipal Council (NDMC) has recorded a progressive increase in its property tax collection. While the department’s annual collection of property tax till 2015 was between Rs 360 crore and Rs 400 crore, it has progressively increased to Rs 415 crore in 2016, Rs 580 crore in 2017, and the highest at Rs 712 crore in 2018.
This is a result of stricter implementation of a 2009 revision of the method of revenue assessment, said Murari Lal Sharma, director of the tax department, NDMC.
With property tax being the single largest component of the NDMC’s total revenue — at around 25% — it has led to considerable increase in the revenue collected. The NDMC area houses some of the most high-valued private property in the city.
Until 2009, property tax assessment of the 14,000 private properties in the area was done on a discretionary basis under Article 63(1) of the New Delhi Municipal Act, 1994.
Under this, the annual rent of the property against which tax was estimated was “the annual rent at which such land or property might reasonably be expected from year-to-year”, with a 10% deduction from the said rent to account for maintenance and other expenses.
According to Sharma, this hypothetical rent was often challenged by property owners in the form of litigation. To rectify these legal loopholes, the New Delhi Municipal Council (Determination of Annual Rent) bye-laws, 2009, was introduced. This had a uniform formula to calculate rent. The application of this formula resulted in the assessed amounts being higher than tax collected via the older procedure, Sharma said.
Though this revision was introduced in 2009, Sharma said the provisions were not implemented until recently because of governmental lags in giving fresh rent notices to influential property owners of Lutyen’s Delhi.
However, in 2015, 12,000 pending notices were liquidated.
Despite the revised rent assessment provision, the NDMC continues to face legal challenges. For instance, 14 disputing parties — such as commercial properties including The Ashok hotel, The Imperial Hotel and The Taj Mahal Hotel — have moved the Supreme Court against the increased estimate.
The parties have challenged the increased estimation of the rent of open land, which they claim does not add to their profit. The SC will hear their plea on May 6.