The Unit Area Method of computing property tax, introduced by the Municipal Corporation of Delhi (MCD) in 2004, had provided for an increase in property tax if there was a rise in the Consumer Price Index. An in-house Indexation Committee, set up by MCD Commissioner K S Mehra two months ago, will now look at how property tax can be revised or increased. According to senior officials, the MCD is looking at increasing property tax in areas where the Delhi Metro has reached and areas which have seen more development.

MCD sources said that with development, the value of these properties have gone up, and therefore there should be a corresponding rise in tax. The Unit Area Method of collecting property tax was implemented in the MCD in 2004. Under Section 116 J of the Delhi Municipal Act, a Municipal Evaluation Committee has to be formed every three years to revise property rates based on the Consumer Price Index. The committee has the power to upgrade or degrade the category of a colony based on the development in the area.

This three-member committee is formed by the Delhi Government. However, with no new committee formed after the original committee had been dissolved, a cash-strapped MCD is now taking matters in its own hands.

The last report submitted by the original committee had been rejected by the MCD’s political wing in July 2008 because it had missed the deadline by five months.

“The report submitted was not satisfactory. The members of the committee could not arrive at a consensus prompting the MCD to reject the report,” said the Chairman of the MCD Standing Committee Vijender Gupta.

Property prices, however, in several areas have gone up because of the construction of the Delhi Metro, said officials. “In several areas where sewer and water pipelines have been laid, the category of the colonies need to be upgraded. Areas where malls and other commercial units have developed, property prices have gone up,” said a source.

The MCD is now planning to increase the base property tax rates depending on the increase in the Consumer Price Index.

The office of the Additional Commissioner Revenue said that the new Evaluation Committee should have been formed in 2008. But no such committee has been formed and it has been five years since the Unit Area Method was implemented. “The committee will revise the property rates based on the increase in the Consumer Price Index,” said an officer adding that the MCD will now take the recommendations of their in-house Indexation Committee which is expected to table its proposal to increase tax in February.