MCD imposes 1% monthly interest on government property tax dues

The Municipal Corporation of Delhi (MCD) has passed a resolution to impose 1% monthly interest on outstanding property tax and service charges owed by government and railway properties, effective April 1st. This measure comes after a circular issued by MCD's assessment and collection department on March 21st, stipulating that interest will accrue for late payments beyond the due date of June 30th each financial year. Unlike residential and public sector units, government departments and Indian Railways pay service charges on their properties.
With many government departments currently settling service charges at 75% of the property tax dues, even in cases of delay or default, the resolution was ratified on March 7 to levy a simple interest rate of 1% per month or part thereof until the service charge is settled. This circular aligns with Section 152 of the Delhi Municipal Act 1957, permitting interest imposition in case of default, which was previously applicable solely to private properties.
An estimated outstanding sum of approximately INR 2,000 crore in service charges or property tax is owed to MCD by government departments, Public Sector Undertakings (PSUs), and railways. Civic officials have noted an influx of inquiries from government departments seeking clarification on this matter. An official emphasized that this initiative is part of MCD's efforts to bolster tax collection and ensure timely payments from individuals, organizations, and government entities.
In the fiscal year 2022-23, MCD reportedly received INR 850 crore from government departments, railways, and PSUs, which included pending property dues. As of last week, the total collection for the ongoing fiscal year amounted to nearly INR 2,000 crore from property tax, compared to INR 2,417 crore in 2022-23. Notably, last year's collection figures were buoyed by MCD's amnesty scheme, Samriddhi, introduced in October 2022.
This action shows MCD's dedication to boosting revenue and improving tax administration processes. By applying interest charges to government and railway properties, MCD intends to encourage timely payment of dues and promote fiscal responsibility among stakeholders. This decision reflects MCD's proactive stance in dealing with overdue payments and reinforcing financial stability in the municipal sector.

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MCD imposes 1% monthly interest on government property tax dues

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