Municipal Corporation of Delhi (MCD) has approved a resolution to impose 1% monthly interest on pending property tax or service charges of govt and railway properties. The decision will be implemented from April 1.On March 21, MCD’s assessment and collection department issued a circular stating that the interest would be charged if the tax payment was made after the due date — June 30 of every financial year. Unlike residential properties and public sector units, govt depts and Indian Railways pay service charges on their properties.
Many govt departments now pay service charges at 75% of the property tax dues even when there is a delay or default. Hence, the resolution was passed on March 7 for levying simple interest on property tax dues at 1% for every month or part of the month till the service charge is paid. The circular has been issued in accordance with Section 152 of Delhi Municipal Act 1957 that allows imposition of interest in case of an default. So far, it was imposed only on private properties.
According to a rough estimate, govt depts, PSUs and railways owe MCD around Rs 2,000 crore as service charges or property tax. Civic officials said they were already receiving queries from govt departments for clarity. “The initiative is among the steps taken by MCD to increase its tax collection and pursue people, organisations and govt departments to pay dues on time,” said an official.
In the 2022-23 financial year, MCD claimed to have received Rs 850 crore from govt depts, railways and PSUs, including pending property dues. Till Tuesday, the current financial year’s overall collection was nearly 2,000 crore from property tax. In 2022-23, it stood at Rs 2,417 crore. The collection was high last year due to MCD’s amnesty scheme, Samriddhi, introduced in Oct 2022.