Chandigarh MC chief writes to UT to take call on property tax hike

The municipal commissioner has written to the UT administration, seeking its decision on the proposed fourfold increase in property tax on the residential as well as commercial properties in the city. The proposal, which was vehemently rejected by councillors across party lines last month, now rests with the Punjab governor and UT administrator, who hold the authority to approve the hike despite political opposition.

Notwithstanding the opposition from councillors, MC commissioner Amit Kumar had remained steadfast in support of the proposal, arguing that it was the “need of the hour” to overcome civic body’s pressing financial distress.

“Chandigarh MC is struggling to even pay staff salaries. Though the proposal was rejected, I will add a dissent note highlighting the necessity of this tax hike,” Kumar had said.

Kumar has now written a detailed note to UT administration about the tax hike proposal, councillors’ views and asked the administration to ‘take necessary and final decision’ on the proposal.

The push to increase property tax aligns with the directions of UT administrator Gulab Chand Kataria, who has been urging the MC to optimise property tax receipts to address its severe financial woes.

Property tax never revised: MC

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

Additionally, MC was also proposing a 1% annual hike on commercial properties (until reaching the limit of 15%) and 5% annual hike on residential properties.

In their agenda, MC officials specified, “Property tax at the rate of 3% on annual rateable value was introduced on commercial, industrial and institutional land and buildings in 2004. Subsequently, property tax on residential land and buildings was imposed in 2015. Presently, there are approximately 31,007 commercial properties, generating an annual demand of ₹36 crore and around 1,08,500 residential properties contribute annual demand of ₹9 crore. The property tax percentage has not been revised to date.”

“As per the first chief secretaries conference, property tax should be 1% of GDP according to which Chandigarh should generate over ₹500 crore as revenue from tax. At present annual demand is ₹45 crore. The MC Act allows property tax up to 15%. A comparative analysis with the Mohali MC revealed that despite a smaller population of 2.34 lakh, the annual property tax demand stands at ₹40 crore,” the agenda detailed.