NEW DELHI: Financial planners in the Municipal Corporation of Delhi might be a worried lot these days due to the poor property tax collection in 2005-06, but many property owners in the Capital are rejoicing as their tax rate have seen a steep decline under the new tax regime of unit area method. The biggest beneficiaries are commercial property owners and those renting out their properties.

The main reason behind the steep fall in tax collection is the reduction in categories of various colonies and areas under the UAM of property tax collection resulting in a lower tax rate. Moreover, political interference in the functioning of the civic body and the lackadaisical attitude of the civic body's Assessment and Collection Department is also to be blamed for it. Chasing a target of Rs.1,376 crores in 2005-06, the MCD is hoping that the final collection touches at least Rs.850 crores as was done in 2004-05.

Alleging that the MCD officials and its leaders went out of the way to benefit major taxpayers, Bharatiya Janata Party councillor Arti Mehra said: "For instance, prior to the implementation of the new regime, the MCD used to get Rs.3 crore from Videocon Tower at Jhandewalan that has now gone down to Rs.30 lakhs. Similarly, tax collection have also gone down in the case of other prominent buildings like Capital Court at Munirka (from Rs.2.5 crores to Rs.30 lakhs), American Express at Mohan Cooperative (from Rs.70 lakhs to Rs.7 lakhs) and the Delhi Government's new secretariat -- Players' Building (from Rs.3.71 crores to Rs.24 lakhs)."

Moreover, some five-star hotels have also benefited from it. Like the Welcome Marriot initial tax was Rs.5 crore but now its owners have been asked to pay Rs.3 crores only, while Grand Hyatt's tax has been lowered from around Rs.4 crores to Rs.80 lakhs, she said. "Similarly, property tax collection from major commercial areas like Bhikaji Cama Place, Rajendra Place and several big markets have also seen a decline of more than 50 per cent in the new regime. Another lot of beneficiaries are those who rent out their properties for monetary gains but are paying the same tax as people with self-occupied properties," Ms. Mehra added.

While making the new tax regime, the Municipal Valuation Committee had divided all the 1,985 colonies of the Capital into eight categories and fixed their unit area value accordingly. But later categories of more than 400 colonies, some in posh localities, were lowered leading to decline in their tax rate. Moreover, the MCD also failed miserably to increase its tax base by including more properties even as several property owners refused to pay up their dues leading to accumulation of arrears with the civic body.

However, Leader of MCD House Jitender Kochar is hopeful that situation might gradually change and collection would go up in coming years. Blaming big government defaulters including Delhi Development Authority, Delhi Jal Board and Delhi Metro Rail Corporation for not clearing their dues on time, Mr. Kochar said the innovative tax regime has benefited both residents and the civic body by making the task easier and transparent. "We have asked the Assessment and Collection Department officials to increase the tax base and also expedite the collection process from the beginning of current fiscal to avoid a crisis-like situation at the end of 2006-07," Mr, Kochar added.

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