Property tax panel given the goahead

NEW DELHI MAY 29. The Standing Committee of the Municipal Corporation of Delhi today gave its consent for appointment of an expert committee to give its recommendation on various modalities for implementing the unit area method of assessment of property tax in the Capital from the next financial year.

To be appointed by the Delhi Government, the committee headed by the former Joint Secretary, Union Urban Development Ministry, K. Dharmarajan, would determine the principles for classification of various colonies including regularised, unauthorised regularised, unauthorised colonies and villages. It will work out a method of calculating the property tax and determine the rate at which the unit area tax on the property would be calculated.

Among other members of the proposed committee include R. M. Kapoor, Chief, Urban Studies Centre, Times Research Foundation; Subir Saha, Dean of Studies, School of Planning and Architecture; Ramnath Jha, Regional Coordinator, Urban Management Programme, All India Institute of Local Government; Gangadhar Jha, National Institute of Urban Affairs; and R. D. Gupta, Consultant to Delhi Department of Urban Development. The committee would be asked to submit its report within four months so that the civic agency has enough time to finalise the scheme and implement it from April 1, 2003.

Besides examining various legal aspects concerning the unit area method, so that its recommendations could stand the test of judicial scrutiny, the committee would also be asked to classify various properties based on their characteristics and determine the index factors and sub-factors on which the Property Tax would be calculated.

The Municipal Commissioner, Rakesh Mehta, hoped that with the implementation of unit area method of assessment of property tax, the tax collection in Delhi would increase considerably. This was one area which has not been properly utilised so far, he said, adding it there were several drawbacks in the existing system.

``We want to bring all properties under the net. For this, a major reform is required, which would remove the current doubts in the minds of property owners about the present system which is very arbitrary and non-transparent,'' Mr. Mehta said.

Listing out the major shortcomings of the present system of property tax, he said long term tenancies lead to low valuations and there was no way of enhancing the rent until a new transaction takes place. In many cases the collection costs were higher than the revenue generated.

There was vast variation in the tax burden based on cost of construction and escalation of the real estate values leading to inequities and complaints. There was no well regulated real estate market, many transactions hide the real value of property transaction.

According to Mr. Mehta, the present system had resulted in a large number of litigations resulting in huge loss of revenue. As of now there were more than 3,500 court cases worth over Rs. 500 crores related to property tax disputes. Not only this, there was a huge discrepancy in the method of assessment, which becomes a breeding ground for corruption. Sub-letting, sub-divisions and collusive rent hide the actual potential of the property.

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