The drop in collection of taxes by the Municipal Corporation of Delhi due to reduction in annual valuation of properties under the unit area method as against the earlier rateable valuation method has become a cause of concern for planners.

With collections from property tax and transfer duty under the unit area method being only Rs.5,640.86 crore in the last six financial years, various means of enhancing revenue were suggested at the meeting of the Chief Minister with the Deputy Chairman of Planning Commission recently.

It was pointed out that tax collections also dropped because tax rates were reduced to 6 per cent and 10 per cent from 30 per cent of annual valuation of a property. As a consequence, tax incidence on most properties reduced drastically. In case of non-residential properties, losses to the corporation were even higher as the tax reduced by about 60 per cent in general and by up to 80 per cent in some cases.

Number of problems

Apart from this, the MCD has also been plagued by a number of problems in collecting tax, a presentation made at Yojana Bhawan stated. It was pointed out that at present only about 30 per cent of the properties are in the tax net. The remaining 70 per cent properties are mostly in unauthorised, unauthorised regularised colonies and urban and rural villages.

Ironical as it may sound, the MCD, as per the document, has “limited manpower for conducting door-to-door survey and for realisation of tax”. The civic body was also chastised for having a “below expectation” self-compliance, “poor” enforcement, not having a ready data base of all properties and for rejecting the report of the Municipal Valuation Committee II. It was stated that the revenue of the civic body can be increased either by enhancing the annual valuation of properties through increase in any or all categories, by increasing the tax rates or increasing the coverage of the tax net.


And while enhancing annual valuation comes under the jurisdiction of Municipal Valuation Committee, the increase in tax rates is the exclusive jurisdiction of the legislative wing of the MCD. As far as increasing the tax net is concerned, it is the function of the executive wing of the MCD.

Incidentally, the Municipal Commissioner had told the Planning Commission on May 22 that to improve the financial health of the civic body that caters to about 97 per cent of Delhi's population in about 96 per cent of the area, the MCD will collect three times the present level of property tax (Rs.697.75 crore in 2009-10) in the next two years. For achieving this, a survey has been started and notices are being sent.

The Commissioner had also stated that the MCD needs additional allocation of funds for primary education, health, sanitation and community centres because the provisions were well below requirement.

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