New Delhi: Bringing relief to hundreds of taxpayers in Lutyens’ Delhi and ending a long-standing dispute over property tax calculation, New Delhi Municipal Council (NDMC) is set to implement the unit area method uniformly across its jurisdiction.The move is part of key amendments proposed under the Jan Vishwas (Amendment of Provisions) Bill, 2026, which seeks changes to the NDMC Act, 1994. The Bill, tabled in the Lok Sabha on March 27 by the ministry of commerce and industry, aims to decriminalise minor offences and promote ease of doing business and living.Once implemented, property tax assessment will no longer be based on expected rental income or market rent—parameters that often varied even within the same colony and resulted in higher and inconsistent tax liabilities.“The new system will shift assessment to property characteristics, removing subjectivity linked to rental estimates,” an NDMC official said.Officials said the reform is expected to lower the upper limit of the property tax slab from 30% to 20%, while allowing broader rationalisation of taxation. A committee will be constituted after the Act comes into force to finalise the calculation matrix, though the method will remain uniform across NDMC areas. Tax rates are likely to range between 10% and 20% of the annual value of properties.The method of calculating property tax has remained contentious for years, with several residents’ associations challenging it in court. Officials said the earlier annual rateable value (ARV) system allowed excessive administrative discretion.“While NDMC had attempted to introduce the unit area method earlier, it could not be implemented through bye-laws as the NDMC Act, 1994 mandates an ‘annual rent’ basis. An amendment to the parent law therefore became necessary,” the official said.The reform, recommended under the Jan Vishwas Bill, is expected to reduce disputes, enhance transparency and bring predictability to tax liabilities. It will also do away with what officials described as a pre-Independence-era “property tax inspector raj”.NDMC expects to collect around Rs 1,300 crore in property tax in 2025–26, up from Rs 1,047 crore in the previous financial year. The council has already collected approximately Rs 1,200 crore in the current fiscal and anticipates further improvement once the amendments are implemented.Officials said compliance is likely to increase as taxpayers—earlier wary of criminal prosecution for minor procedural lapses—would be more willing to clear pending dues.The council has also proposed amendments to several other provisions of the NDMC Act to provide relief by decriminalising minor violations.For instance, constructing a building without prior sanction of the chairperson currently attracts imprisonment or a fine of up to Rs 5,000, or both. The amendment proposes removing both imprisonment and fine, while retaining the regulatory provision. Similarly, offences such as failure to demolish unauthorised constructions or raising buildings in violation of orders—which currently attract up to six months’ imprisonment or a fine—are proposed to be decriminalised.In another change, the provision imposing a Rs 1,000 fine for failure to comply with demolition orders for unsafe buildings is proposed to be repealed. The requirement under Section 239(1) to notify authorities before making additions to buildings, which currently carries penal provisions, is also proposed to be repealed.“We have recommended replacing fines with penalties in several cases. In cases of fines, non-payment leads to proceedings before a municipal magistrate. Under the new system, penalties will be adjudicated by an NDMC-appointed officer, simplifying enforcement,” an official said.As part of the rationalisation, the Bill proposes removing the Rs 1,000 fine for allowing filth to flow onto streets, effectively reducing it to zero. However, in cases of failure to comply with requisitions for removal of congested buildings, the existing Rs 1,000 fine is proposed to be converted into a Rs 5,000 penalty.
