2016 is coming as a windfall for commercial property owners. They will have to bear with a large hole in their pocket. It is getting more and more difficult to buy a commercial property in India. For now owners of commercial property in Delhi NCR will have to suffer as they will end up paying 3 times more taxes as compared to what they were paying earlier. SDMC (South Delhi Municipal Corporation) has agreed with the recommendations given by Third Municipal Valuation Committee (MVC).
The recommendations given by the panel includes recategorisation of industrial units, airport, hotels (three stars and above) and other business establishments. And this major restructuring will have a tremendous impact on property taxes in that area by at least 3 times. May 26 is the tentative date decided for final approval of the report submitted by MVC.
If everything goes according to the plan the new policy with higher tax rates for Commercial Property in Delhi NCR will be applicable from 1st April, 2016.The MVC report is still awaited to be approved by standing committee which deals in financial matter.
As per Mr. Ram Mohan Singh, SDMC assessor and collector this step is most likely to increase the agency’s revenue collection by 150 crore during 2016-17.He explained that the industrial areas in south Delhi, presently falling under category G, will be moved to Category B. Similarly, there will be a remarkable increase from 4 to 6 in the factor use of the barat ghars and banquet halls. Since in order to calculate Property tax we multiply rates per square meter (sqm) defined for different categories by factor so this change will make property tax shoot like a rocket.
It was 5 years back in 2011 when this Municipal Valuation Committee (MVC) report was submitted to Municipal Corporation for their kind approval but since then commercial property owners were stress-free until it was decided to go ahead with this report in the present financial year ie.2016-17. The main aim of this report is to increase revenue through improved property tax coverage and bring left-out properties under the property tax net. North and East Delhi MCD have already put this MVC report into action. Now next is the South Delhi Municipal Corporation to come in line with other two corporations.
Apart from commercial property owners and taxpayers residential property taxpayers are also coming in the loop through various methods implemented by South Delhi Municipal Corporation to bring more and more taxpayers in the tax bracket. The methods used may include, conducting door-to-door surveys to spot defaulters, providing unique IDs to taxpayers and preparing a database of property tax payers. One more upcoming feature added to this tax field is the e-passbooks which will be provide to the tax payers along with unique identification cards in order to have online record of all the tax payments made by the taxpayer till now.
All this will leave commercial property in Delhi NCR in a radical situation to be carefully dealt with in near future in order to sustain their profit margins.