CHANDIGARH: With the UT administration in the final stage to decide on the hike in property tax, Chandigarh residents should anticipate increased tax regime for both residential and commercial units starting from the next financial year 2025-2026.
A special committee, headed by the UT finance secretary, has determined that the city’s current property tax, calculated at 3% of annual ratable value, is lower compared to neighbouring and other major cities. The administration finds the present evaluation criteria inadequate when reviewing the matter comprehensively.
“The final decision on the exact hike will be taken at the level of the Punjab governor and Chandigarh administrator. The property tax rates in Chandigarh, particularly for residential properties, warrant a substantial increase, potentially doubling from their current minimal levels. Senior officials are preparing a detailed report with supporting calculations and rationale to substantiate the proposed increase,” UT sources said.
“The existing tax calculation methodology requires thorough scrutiny due to its complex nature. A simplified approach based on property value and related parameters needs to be implemented. The Municipal Corporation has provided comprehensive data, including current tax collection figures across various segments, along with comparative analyses from other cities. These elements have been instrumental in evaluating the proposed tax revision,” sources added.
MC officials, on the condition of anonymity, indicated that the present tax calculation using 3% of annual ratable value (ATR) is insufficient, noting that regulations permit rates up to 15%.
“A review revealed that the city’s property tax assessment relies on outdated survey data. This necessitates a comprehensive evaluation aligned with contemporary methodologies implemented across major municipal corporations in the country,” they added.
The MC has evaluated three primary methods: capital value system, annual rental value system, and unit area value system for tax calculation. They concluded that the capital value system is most suitable for Chandigarh, as it determines amounts based on property market values. The civic body noted this method’s scientific approach also received support from the ministry of housing and urban affairs (MoHUA).
Annual plan
The proposed tax increase is intended to be implemented annually, similar to water and garbage collection charges. Previously, the BJP-led MC established an automatic 5% annual increase from April 1 for these services, eliminating the need for general house discussions on future increases.
Agenda in MC house a strategy?
The ruling BJP in MC appears to tacitly support the tax increase initiative. Sources indicate that presenting this agenda in a recent monthly general house meeting was strategic. “Following the rejection of the agenda by house members, the municipal commissioner promptly registered his dissent. The entire documentation has been forwarded to the Chandigarh administration for their evaluation during the current assessment of the proposed increase. The agenda’s presentation in the house meeting was arguably unnecessary, and its subsequent rejection by members has effectively transferred the decision-making authority regarding the increase entirely to the Chandigarh administration,” sources in the UT revealed.
