How to calculate and pay Commercial Property Tax for Delhi NCR properties

Property tax is the greatest source of revenue for the Municipal Corporation of Delhi (MCD) and other local urban governments throughout the world. Property tax is a type of tax which is being charged to the owner of the property and the owner have to pay this tax every year. However, the commercial property tax amount varies from one location to another. Though in Delhi and NCR it’s a big task for the property owner’s to just calculate these taxes and pay it to the Municipal Corporation of Delhi. Due to which in the collection of these property taxes the performance of Delhi is worst when it is compared to several other cities in India because of poor governance.

According to a number of studies, nearly 30 percent 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 as per the survey was done in the year 2011.

Property tax is calculated on the basis of Annual value method in Delhi. And later the tax is then payable to one of the three municipal corporations of the Delhi namely:

1. North Delhi Municipal Corporation

2. South Delhi Municipal Corporation

3. East Delhi Municipal Corporation

Therefore it’s a big task for the MCD as well as the commercial property landlords to just handle this and to get connected with them as per the location of their property. It is also important for the landlords to pay the tax on time in order to avail tax benefits and other discounts.

In order to avail all the benefits, one has to have the prior knowledge about the Commercial property tax and how to calculate it. This amount of revenue that is collected by the MCD is thus used to maintain the basic civic amenities and services in Delhi and NCR. Thus to keep our city neat and clean and use its amenities to the utmost level which are being given to us by the Government of Delhi and Municipal Corporation of Delhi we all have to pay all these taxes as per the required needs and also according to the type of the property an Individual have. As a result, it will improve the functioning of the government system too.

What is Commercial Property Tax?

Commercial property taxes are assessed on any real estate that generates revenue for the owner. The tax amount is based on the assessed value of the property that is which type of property an individual owns. This includes the land and any structures built on the land. This assessment is typically conducted by appraisers employed or contracted by the local or municipal government tax office. In Delhi, it is
being calculated and managed by the MCD (Municipal Corporation Of Delhi) which is being further divided into three municipal corporations in Delhi which are namely:

1. North Delhi Municipal Corporation or North MCD

2. South Delhi Municipal Corporation or South MCD

3. East Delhi Municipal Corporation or East MCD

These 3 Municipal Corporations divides the Delhi into 3 parts. Each Municipal Corporation manages and calculates the respective taxes of the properties which are respectively under their area. When evaluating a commercial property for taxable value, appraisers use the best tactic. In other words, the assessment of the property is based upon its highest potential value, regardless of how the property is currently being used. To determine the “highest and best” use, the appraiser considers what uses are physically possible, financially feasible, most profitable, and legally permissible. While using this tactic, appraisers may also consider the actual income currently derived from the property.

The Commercial Property tax is more than the residential property taxes due to the amount of money and work done on the commercial land. Thus due to this, the tax on commercial property differs from the tax implemented on the residential property.

Calculating Commercial Property Tax (Property Tax Calculator)

Property tax is a type of tax which is being charged to the owner of the property and the owner have to pay this tax every year. However, the tax amount varies from one location to another.The commercial
property tax in Delhi and NCR is being evaluated by the MCD itself. The MCD adopts the Unit Area system that is recommended by the government. And the notable thing is that the property tax rate on commercial, industrial, institutional, residential property vary.

Property tax rate is being calculated with the help of a method named annual value method in Delhi. After this, the calculated tax is then payable to one of the three municipal corporations of the Delhi, that is North MCD, South MCD or East MCD.

Property Tax = Annual Value × Rate of Tax.

Annual Value = Unit area value X Unit area X Age factor X Use factor X Structure factor X Occupancy factor

Unit Area Value

The Unit area value is the assigned value per square metre built-up area of the property.

Unit area of property

This is defined as the total built-up area of the property into square meters term. Note that tax is payable on the built-up area and not on carpet area basis.

Age Factor

This is a type of factor that takes into account about the age of the building and it also provides information about higher tax for the newer properties and lesser tax for the  older properties.

Use Factor

This is a type of factor that takes into the account of the usage of the property and it also determines the lower property tax rate on residential use properties and higher tax on and non-residential ones.

Structure Factor

Structure factor provides the higher property tax rate on Roller-compacted concrete constructions and provides lower tax rate on low-value constructions.

Occupancy Factor

MCD charges lower tax on self-occupied real estate property, whereas higher property tax is charged on rented out properties.

Annual Value = Unit area value X Unit area X Age factor X Use factor X Structure factor X Occupancy fact

In the Unit Area System, the Annual Value is calculated by multiplying the Annual Value with the Rate of Tax.

This is how MCD evaluates the property tax rate for different types of property in Delhi The MCD also provides some rebated for the Senior Citizens, Women, Physically Challenged, and EX-service Man.These public groups get 30% rebated over the taxes that are being released by the Municipal Corporation Of Delhi.

How to pay commercial Property tax?

Earlier when the technology was not that much good registers and files with handwritten entries were used to keep records of property tax payment. Now, the entire process has been moved online in cities and towns while few villages still rely on the manually recorded details in registers. Therefore in Delhi, the best way to pay your property tax, is to pay it online on the website of MCD. And for that, you can use
a credit card, debit card or internet banking.

In the last few Years, the MCD (Municipal Corporation of Delhi) had Invested a lot in the website of MCD and making online payment a way to pay the property taxes thus making it easier for the citizens of Delhi. Just go to the MCD website and there you will have to choose from the following three links, based on your area:

1. South Delhi Municipal Corporation (SDMC)
2. North Delhi Municipal Corporation (NDMC)
3. East Delhi Municipal Corporation (EDMC)

The colonies that are being divided into different areas will be listed on each of the North, South and East municipal corporation websites.

In case the property tax is delayed or if you have not paid your property tax on time the MCD will levy 1% fine every month on the unpaid amount and it will be charged to the owner of the property.

So, this was all the information about commercial property tax that you must know before buying a commercial flat or building.

Disclaimer: Article published by Imperia Structures