Chandigarh Hikes Property Tax: What to Expect in the New Fiscal Year

In a decisive move to bolster municipal revenue amidst a challenging fiscal landscape, the Chandigarh administration has significantly revised property tax rates. Along with an increase in collector rates, the administration has now raised property tax on both residential and commercial properties. In addition, residents will see hikes in water bills, garbage collection charges, and fire safety certificate fees. These comprehensive changes are set to reshape the financial obligations of property owners and generate an estimated additional annual revenue of ₹54 crore for the municipal corporation (MC).

Key Property Tax Changes

The administration has implemented substantial modifications to the property tax structure:

• Residential Properties: Previously taxed at 3% of the Annual Rateable Value (ARV), the new rate has been increased threefold to 9% of ARV. This update reflects the current market conditions and aims to address the fiscal shortfalls faced by the MC.
  
• Commercial and Industrial Properties: For these sectors, the tax rate has been doubled from 3% to 6% of ARV, ensuring that the higher market demand and property values in these areas are appropriately captured.
  

These changes come after years of stagnant property tax rates, even as property values and construction costs have risen. The revised rates are intended to bridge the gap between actual market values and the statutory tax base.

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Revenue Impact and Market Numbers

Chandigarh’s property market consists of a significant number of taxable units:

• Commercial Properties: Approximately 31,000 units currently contribute around ₹36 crore in property tax revenue. Under the new rates, revenue from commercial properties is expected to rise to about ₹72 crore.
  
• Residential Properties: Around 1,08,500 residential units generate an additional ₹9 crore annually. With the updated rate, this figure is projected to increase to ₹27 crore.
  

Combined, these revisions are anticipated to boost the MC’s annual revenue by an estimated ₹54 crore, thereby enhancing the financial capacity of the municipal body to invest in urban infrastructure and public services.

Additional Cost Hikes

Beyond property tax, several other essential services are also experiencing rate increases:

Water Bills to Swell

Residents should prepare for a 5% increase in water tariffs. This modest yet noticeable hike is intended to offset rising maintenance and operational costs for water supply and sewage management.

Increased Costs for Garbage Collection

Garbage collection charges, which are integrated into water bills, will also see a 5% rise. For instance, households currently paying around ₹55.12 for garbage collection on smaller properties will face higher charges, with similar proportional increases for larger homes. This adjustment is crucial to cover the escalating costs of municipal waste management.

Fire Safety Certificate Fee Up

The fee for obtaining a fire safety certificate has been raised by nearly 10%. For Group A properties (such as houses, hostels, and hotels), the fee is now approximately ₹14 per square meter, while for commercial buildings and shops, it stands at around ₹12 per square meter. This increase forms part of broader efforts to enhance safety standards and ensure regulatory compliance across property types.

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Additional Context and Policy Rationale

The decision to revise property tax rates comes at a critical time for Chandigarh’s municipal finances. The MC has been grappling with a severe fiscal crisis that has stalled development works and delayed staff salaries. In March 2025, the MC exceeded its previous revenue target by collecting over ₹55,000 crore in stamp duty registrations. With a new target of ₹60,000 crore for FY 2025-26, the updated property tax rates are a strategic measure to boost revenue and modernize property valuations in line with current market trends.

Public Reactions and Future Implications

The announcement that Chandigarh hikes property tax has elicited mixed responses from various stakeholders. Critics argue that the increased tax burden comes at a time of economic uncertainty and may adversely affect property affordability. Opposition leaders have condemned the hike as a politically motivated move, while municipal officials defend it as essential for maintaining the long-term financial sustainability of the MC.

Developers are also expressing concerns that higher rates may dampen market sentiment. With property values already at premium levels, passing on these costs could lead to slower transactions. However, the administration’s approach is to balance revenue generation with the need to maintain essential public services and urban infrastructure.

Conclusion

The recent fiscal adjustments, where Chandigarh hikes property tax on both residential and commercial properties, represent a significant shift in the city’s revenue strategy. With residential tax rates now set at 9% and commercial rates at 6% of ARV, along with additional hikes in water bills, garbage collection, and fire safety fees, property owners should expect a higher overall cost of ownership in the coming fiscal year. These changes, though challenging, are designed to ensure that property valuations are more reflective of current market conditions, thereby securing the necessary revenue to support future urban development.

As the new tax structure takes effect, all stakeholders in Chandigarh’s real estate market must adapt to the evolving financial landscape. Staying informed about these updates and planning accordingly will be key to navigating the impact of these increased costs.

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