How to calculate house tax and property tax in Delhi?

Taxes play a crucial role in sustaining the functioning of urban areas. They provide funds for vital infrastructure development and support essential services. In Delhi, the Municipal Corporation of Delhi (MCD) administers the collection of house tax and property tax. It contributes to the maintenance of city amenities and public welfare initiatives.

This blog will explore the intricacies of calculating house tax and property tax in Delhi.

Delhi MCD property tax calculation: Understanding the process

Calculating property tax in Delhi involves several factors and considerations that determine the final amount to be paid to the Municipal Corporation of Delhi (MCD).

Let's break down the process step by step:

Factors affecting property tax

• Rate of tax: MCD publishes tax rates annually for properties categorised from A to H.
• Unit area value: This value per square metre varies for different property categories.
• Unit area of property: The built-up area (excluding the carpet area) is considered for calculation.
• Age factor: Newer properties incur higher taxes compared to older ones, with the age factor ranging from 0.5 to 1.0.
• Use factor: Residential properties are taxed less than non-residential ones, with a value of '1' for residential properties.
• Structure factor: RCC constructions face higher taxes than low-value structures.
• Occupancy factor: Properties rented out are taxed higher than self-occupied ones.

Calculate house tax Delhi: The formula

The MCD employs the Unit Area System for property tax calculation across Delhi. The formula used is as follows:

Property Tax = Annual Value x Rate of Tax

Where Annual Value = Unit Area Value per sq meter x Unit Area of Property x Age Factor x Use Factor x Structure Factor x Occupancy Factor.

House Tax Delhi calculator: Steps to calculate house tax in Delhi

• Determine Unit Area Value (UAV): Calculate based on property type and location.
• Calculate Annual Value: Multiply UAV by the entire built-up area.
• Apply Age Factor: Classify the property as new, old, or extremely old.
• Consider Exemptions:Subtract relevant exemptions from the net annual value.
• Apply Tax Rate: Use the tax rate to calculate the final house tax amount.
• Additional Aspects: Don't forget about education cess and user fees.
• Payment Schedule: Check due dates and payment schedule to ensure timely payment.

Delhi MCD Property Tax Calculation

MCD uses the Unit Area System and a specific formula to determine property tax. Here's a breakdown:

Property Tax = Annual Value x Rate of Tax

Property Tax Calculator Delhi: Understanding the components

• Unit Area Value: Represents the built-up area per square meter.
• Age Factor: Determines tax based on the property's age.
• Use Factor: Defines tax variation between residential and non-residential properties.
• Structure Factor: Considers construction type's impact on tax.
• Occupancy Factor: Accounts for rental properties' higher tax compared to self-occupied ones.
• Rate of Tax: Categorises properties into eight groups (A to H) based on locality value estimation.

The final word

Understanding how to calculate house tax and property tax in Delhi is essential for homeowners and property owners. It ensures compliance with municipal regulations and contributes to the development of urban infrastructure and public services. By considering factors such as the property's category, age, use, structure, and occupancy, individuals can accurately determine their tax liabilities.

Stay informed and proactive in managing your property tax obligations to support the growth and maintenance of the city's amenities.