MCD Property Tax: De-Jargoned

Property tax is the greatest source of revenue of the Municipal Corporation of Delhi (MCD) and other local urban governments throughout the world.

In collecting property tax, Delhi's performance is worse than that of many other cities in India because of poor governance. According to a number of studies, nearly 30 per cent of the properties in Delhi are not listed in the municipal register. In other words, out of 25.3 lakh properties, only 9.6 lakh are registered,according to a 2011 India Municipal Finance Report of the National Institute of Public Finance and Policy.

Although homebuyers are often hesitant to pay property tax, paying property tax on time is important to avoid legal hassles and avail tax benefits.

Also Read: How To Calculate Property Tax In Delhi

If you are a homeowner in Delhi, here are the essentials you need to know about paying property tax:

How does the MCD calculate property tax?

To calculate property tax, the MCD adopts the Unit Area System recommended by the government. In the Unit Area System, the tax you pay on your real estate assets is a function of the built up area, the period of construction, the structure of the building, the location of the property in Delhi and the type of property. The property tax rate on commercial, residential, industrial, institutional property vary.

If your home is an A or B category residential property, you will pay a property tax of 12 per cent. If your home is a category C, D or E residential property, you will have to pay 11 per cent as taxes. If it is F, G or H category, you will have to pay a tax of 7 per cent.

The formula MCD uses to calculate property tax is:

Property tax = Annual Value × Rate of Tax.

Annual Value = Unit Area Value × Age Factor × Use Factor × Structure Factor × Flat factor × Occupancy Factor

In the Unit Area System, the Annual Value is calculated by multiplying the Annual Value with the Rate Of Tax (Picture Credit: Municipal Corporation Of Delhi)

How to pay property tax online

You can pay the property tax by logging on to http://www.mcdpropertytax.in, entering your property ID and following the instructions. If you were not allotted a property ID, you may calculate the property tax using the Unit Area System formula.

Tax rebates

If you are a senior citizen, woman, physically handicapped, or an ex-serviceman, the MCD allows a rebate of 30 per cent on property tax. But, this will apply to your property only if it is wholly self-occupied and used for residential purposes. The rebate of 30 per cent is applicable if the total covered area is up to 200 sq mtr, on pro rata basis. If the covered area of your home is greater than 200 sq mtr, the formula to calculate the rebate is Annual Tax *200* 0.3/Total covered area.

If you own a small flat, you are likely to get tax concessions. If you own a DDA or Cooperative Group Housing Society flat with the total covered area only up to 100 square metres, the tax concession is 10 per cent. If you own a group housing flat, if you pay the tax before June 30 of the financial year, the tax concession is 20 per cent.

Why should you pay property tax on time?

In a financial year, if you pay the property tax in one installment before June 30, you will be eligible for a rebate of 15 per cent. Up to March 31, you will have to pay the property tax with pro rata interest (interest in proportion to the time passed). But, after March 31, a penalty and interest will be levied on the property tax payment.

So, make sure that you do pay your property tax on time. Download the Property Tax form here. Start now.