The Hindu : New Delhi News : MCD heading for a financial mess

Online edition of India's National Newspaper
Friday, Nov 25, 2005

New Delhi

New Delhi

MCD heading for a financial mess

Sandeep Joshi

For the second year running, it is unlikely to meet its ambitious property tax collection target

NEW DELHI: The Municipal Corporation of Delhi is heading for a financial mess. For the second year running, it is unlikely to meet its ambitious target of collecting over Rs.1,200 crores from property tax. While last year when the much talked about new Unit Area Method was introduced, the civic body had managed to collect only Rs.835 crores, this year it is not even likely to cross the Rs.800-crore mark.

Importantly, property tax is a major source of revenue for the civic body as around 80 per cent of the taxes collected come from it alone. Prior to introduction of the new method, the MCD collected a record Rs.920 crores in 2003-04 and over Rs.1,200 crores in 2004-05. However, in the changed scenario, it managed to collect only Rs. 835 crores in 2004-05, a deficit of almost Rs.400 crores.

Likely to worsen

And now the situation is likely to worsen further as by October 31, which was the last date for depositing the tax with 15 per cent rebate, the collection figure stood at just Rs.348 crores. "By this rate, we will hardly be able to collect Rs. 800 crores. It is undoubtedly an alarming situation and we are now planning to take some urgent measures ," said a senior official in the MCD's Assessment and Collection Department.

In fact, at the time of the introduction of the new Unit Area Method for property tax collection, former Municipal Commissioner Rakesh Mehta had tried to allay fears, including that of the Delhi Government, regarding poor tax collection.

Stating that there were around 25-lakh properties in the MCD area of which only around 9-lakh property-owners paid tax, Mr. Mehta had claimed that the new system would help in increasing the tax net substantially.

Based on the quality of civic amenities provided, 1,985 colonies of the Capital were divided into eight different categories. While the unit area value for colonies falling in the lowest category was fixed at Rs. 320 per sq.m., while of those in the highest category was Rs. 630 per sq. m. However, succumbing to political pressure, MCD on several occasions lowered the categories of various colonies and areas thereby decreasing the possibility of collecting more revenue.

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