MCD polls 2017: Aam Aadmi Party’s house tax waiver promise is going to help Khaas Aadmi

The total internal revenue for the South Corporation in 2016-17 was Rs 2,755 crore.

Written by Naveed Iqbal | New Delhi | Updated: April 2, 2017 9:26:29 am
Arvind Kejriwal, Arvind Kejriwal defamation case, defamation case against arvind kejriwal, Kirti Azad, DDCA, Chetan Chauhan, India news, Indian Express Arvind Kejriwal (Source: Express Photo by Amit Mehra/File)

Exactly a week ago, AAP leader and Chief Minister Arvind Kejriwal announced that his party planned to abolish residential house tax if voted to power in elections to municipal corporations in Delhi scheduled later this month. But a look at the financial records of the three municipal corporations suggest that those who stand to benefit most from waiver of property tax will be owners of properties in upscale colonies. Revenue records of the North, South and East municipal corporations show that property holders in the top four tax-paying categories account for the majority share of the total collected amount.

The total internal revenue for the South Corporation in 2016-17 was Rs 2,755 crore. The corresponding figure for East Corporation was Rs 1,478 crore and for the North Corporation, it was Rs 2,668 crore. Since one-fifth to one-third of the revenue of the three corporations comes from property tax, any waiver will impact civic services such as sanitation, primary health and education because property tax earnings are utilised to provide these services.

All properties in Delhi are divided into eight categories, from A to H, and each category pays a different rate per square meter to the civic bodies. Category A, which includes areas such as Friends Colony, Sunder Nagar, pays the highest property tax — at the rate of Rs 630 per square metre; Category B (Safdarjung Enclave, Kailash Colony) pays Rs 500/sq m. The rate is Rs 400/sq m for Category C; Rs 320/sq m for Category D; Rs 270/sq m for Category E; Rs 230/sq m for Category F; Rs 200/sq m for Category G, and, Rs 100/sq m for colonies in Category H, where they are not rural.

In its statement, the AAP said: “AAP has made a full study of the finances of the MCD and the process of making amendments in the Delhi Municipal Corporation Act, 1957 before making the promise. When we come to power in the MCDs, we can and will abolish house tax.” But this promise has had officers worried. While serving officers declined to be named, others like former municipal commissioner K S Mehra were more forthcoming. He said a waiver will “certainly benefit those living in the posh colonies of Delhi” and adversely affect obligatory functions of the corporations. “Tax needs to be augmented further and more people need to be brought into the tax net,” Mehra said.

In the past, civic body officers have objected to amnesty schemes announced by the BJP — it currently controls the municipal corporations — providing 100 per cent waiver on interest and penalties, stating that such measures “incentivise defaulters instead of rewarding tax payers”. In the South and North corporations, over 40 per cent of property tax comes from the top four categories. This, when only about 35 per cent of property owners in Delhi, pay tax and the majority colonies in these two corporations fall in the G category — 426 of 1,101 colonies in the North; and, 764 of 1,366 in the South.

In the East, 41 per cent of the tax comes from Category F (Rs 230/sq m), followed by 32 per cent in Category D (Rs 320/sq m). Additionally, the rate of property tax which forms part of the total tax calculation is also highest for A and B categories at 12 per cent and 7 percent for F,G and H. It is 11 per cent for categories C, D, E.  Property tax has not been hiked during the last ten years and officers say increasing the tax or upgrading colonies into higher categories could have helped the North and East corporations which have been grappling with financial crisis. The Municipal Valuation Report, which advocated this upgradation and was submitted to the corporations in 2010, has been pending. Elections to the three corporations are scheduled to be held on April 23.

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