After collector rates, Chandigarh admn hikes property tax too

After imposing a significant hike in collector rates from April 1—making property purchases costlier—the UT administration has now approved a three-fold hike in property tax on residential properties and doubled the tax on commercial properties as the new financial year kicks in, a move that is set to further burden city residents.

However, in a controversial decision, the administration has exempted government-owned properties from the hike, sparking criticism.

Property tax, initially introduced in 2004 at 3% of the annual rateable value (ARV) for commercial, industrial and institutional buildings, was extended to residential properties in 2015. Ever since, despite nearly a decade of inflation and the civic body’s growing financial strain, the rates remained unchanged—until now.

According to the administration’s latest notification, residential property tax will now be charged at 9% of ARV— three times the previous rate, while commercial and industrial property tax will rise to 6% of ARV—double the earlier rate.

Chandigarh has around 31,000 commercial properties, contributing ₹36 crore in property tax and around 1,08,500 residential properties that generate an additional ₹9 crore, adding around ₹45 crore to MC coffers annually.

With the hike, this figure is expected to jump by ₹54 crore annually, bringing in ₹72 crore from commercial and ₹27 crore from residential properties —a major boost for the cash-strapped MC.

MC had proposed four-fold hike

Plagued by a debilitating fiscal crisis, which has halted development works and delayed staff salaries, and no special assistance from the UT administration, MC had in February this year sought to raise property tax across all categories by four times, which could have boosted its annual revenue by around ₹200 crore.

Additionally, MC was also proposing a 1% annual hike on commercial properties (capped at 15%) and 5% annual hike on residential properties.

The proposal was vociferously shot down by all councillors, cutting across party lines. Despite the political opposition, MC commissioner Amit Kumar had defended the proposal in a dissent note marked to UT, calling it the “need of the hour” to address the civic body’s financial distress. Now, the UT administration, while not accepting the proposal as is, has approved an up to three-fold hike.

Speaking about the hike, Chandigarh mayor Harpreet Kaur Babla claimed, “I was of the opinion to increase the property tax by 1% on residential and 2% on commercial categories, but the Opposition playing politics rejected this. So, the administration, exercising its power under the Punjab Municipal Act, has levied the property tax hike. This is due to non-cooperation of the Congress and AAP, and their petty politics.” 

Targeting the BJP, AAP councillor and leader of Opposition Jaswinder Kaur said the BJP had a triple-engine government (mayor, administrator and central government): Yet, instead of providing additional grants to MC for smooth functioning, the BJP government has increased burden on city residents. We condemn the hike.”

HS Lucky, president of the Chandigarh Congress vowed to oppose the hike tooth and nail: “It is an exorbitant rise. The BJP in connivance with Chandigarh administration is all set to rob the city residents. I had already warned of this back-door move by them.”

Govt buildings spared despite ₹250-cr dues

While the UT administration’s decision aims to shore up MC’s dwindling revenue, the exemption for government-owned properties has sparked criticism.

The UT notification states that government properties will continue to be taxed at the current 3% ARV.

Notably, the civic body started levying property tax (also known as service tax when being charged from government buildings), yearly, on government buildings in 2004.

Even when government buildings enjoy 25% rebate on service tax every year, several such properties have defaulted in tax payments, leading to a whopping ₹250 crore in dues, a major gap in MC’s annual revenue.

The list of defaulters runs long, with around 650 buildings of the Punjab, Haryana, Himachal Pradesh and central governments in Chandigarh, and even the UT administration yet to clear their tax dues.

In October 2024, MC councillors had even revoked the 25% rebate in service tax being offered to government buildings annually, but the decision was not approved by the UT administration.

Property tax rebate available till May 31

In some relief, payment of property tax between April 1 and May 31 will feature a 10 to 20% rebate. Commercial property tax payers will receive a 10% rebate, while residential taxpayers will receive a 20% rebate.

BRACE FOR BIGGER BILLS IN NEW FINANCIAL YEAR

Starting April 1, as a brand new financial year rolls in, city residents will feel the pinch, as not just property tax, several other essential services and amenities will also become costlier. From property transactions to water bills, garbage collection and fire safety certificates, multiple price hikes will take effect. However, there is some relief for administration’s outsourced employees, who will see an increase in their salaries.

Properties get pricier

The UT administration has approved a steep hike in collector rates across various property categories, making real estate deals costlier. This is the first revision since April 2021. The administration has notified an over four-fold increase (316%) in collector rates for residential areas in villages, a 128% hike for properties in Sectors 1 to 12, a 98% increase in Sectors 14 to 37, and an 82% rise in Sector 38 and beyond.

Water bills to swell

City residents will have to pay 5% more on water bills. After raising water tariffs by up to 150% for all categories of consumers in 2022, the UT administration had, from April 2023, implemented an annual 5% tariff increase and introduced a sewerage cess on water bills, further raising costs for consumers.

Pay more for garbage collection

The garbage collection charges, which is charged with water bills, will also see a 5% hike. The garbage collection charge for houses up to 2 marlas will increase from ₹55.12 to ₹57.87, while that for houses from 2 to 10 marlas will increase from ₹110.25 to ₹115.76. Houses sized 10 marlas to one kanal will now have to pay ₹231.5 instead of ₹220.5. Similarly, the charge for houses sized one kanal to two kanal will be ₹289.38 compared to ₹275.6 earlier, and for houses with an area of ​​more than two kanal will go up from ₹385.8 to ₹405.09.

Fire safety certificate fee up

MC has increased the fire safety certificate charges by nearly 10%. A fee of ₹6,615 or ₹14 per square metre will be levied on Group A (houses, hostels, hotels, etc), Group B (educational institutions), Group C (hospitals, health centres) and Group D categories. Group E (commercial buildings), Group F (shops and markets), Group G (industrial units) and Group H (warehouses) will have to pay a fee of ₹6,615 or ₹12 per square metre. Group J buildings, which store substances like petrol, gas, explosives and rocket propellants, will be charged at the rate of ₹6,615 or ₹14 per square metre.