Chandigarh scales down property tax after outcry
Hike for residential properties brought down from three-fold to two-fold; tax for commercial and industrial properties also revised slightly
Facing intense backlash from residents, traders, industrialists and even political circles, the UT administration on Wednesday offered marginal relief by reducing the property tax hike imposed on both residential and commercial properties from April 1.
In a fresh notification on Wednesday, the administration announced that residential property tax for the financial year 2025-26 will now be charged at 6% of the Annual Rateable Value (ARV)—double the earlier rate, but lower than the initially announced threefold increase to 9%.
Similarly, commercial and industrial properties will see tax rates set at 5% of ARV, instead of the earlier announced 6%.
The decision comes three weeks after the administration’s March 31 announcement of a steep property tax revision, a move that had sparked widespread outrage across the city.
Resident and trader bodies, Opposition parties Congress and AAP, and even BJP’s own councillors had condemned the sharp hike.
The BJP argued that the hike was decided solely by the UT administration’s officers, without any discussion with elected representatives or even UT administrator, a move that left the city’s ruling party red-faced and running for damage control.
Following the revision in hike, BJP mayor Harpreet Kaur Babla thanked the administrator and administration, while giving credit to her party for tirelessly voicing concerns of the common people.
Opposition parties Congress and AAP, however, cited the revision as “inadequate”and demanded a complete roll-back, claiming that the property tax was increased arbitrarily without following the due procedure.
Resident bodies also called for a total withdrawal of the tax hike, instead requesting for a gradual rise over the years.
Introduced in 2004 for commercial properties and extended to residential buildings in 2015, property tax rates had remained unchanged for nearly a decade, despite mounting civic body expenses.
How the property tax row unfolded
Ironically, the same BJP-led MC had initially proposed an even steeper hike in a desperate bid to generate revenue.
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.
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.
Once the agenda is rejected with a dissent note, and even otherwise, UT can exercise its power and take a decision.
On March 31, the UT administration, while not accepting the proposal as is, had tripled the residential property tax and had doubled the commercial property tax.
The sudden hike—accompanied by simultaneous increases in collector rates, garbage fees, water tariffs, and electricity taxes—had left residents frustrated and protesting.
The decision also triggered political uproar in the city, with the Chandigarh BJP unit on April 15 threatening of mass resignations by the mayor and all party councillors if the UT administration did not revoke the tax hike and release additional funds for the cash-strapped MC by April 16.
However, no resignations ever materialised.
But the BJP delegation on April 21 met the administrator following his return to the city. The very next day, the administrator sat down for a discussion with the current mayor and former 10 mayors of the city, before announcement of a revision on April 23.
On the other hand, the Congress staged multiple protests for a complete roll-back, whereas the AAP moved the Punjab and Haryana high court, questioning the hike’s constitutional validity.
The plea, filed by AAP Chandigarh unit president Vijay Pal Singh, demands immediate suspension of the hike, and judicial review of the decision’s validity and procedural transparency. It demands that MC be directed for creation of a “balanced and practical tax policy” based on public consultation.