Chandigarh, July 17, 2025 (Yes Punjab News)
The Punjab government has officially announced a 5% increase in property tax rates for residential and commercial properties across all Urban Local Bodies (ULBs) in the state, effective from April 1, 2025, for the financial year 2025–26. The move aligns with a national mandate issued by the Ministry of Housing and Urban Affairs (MoHUA) to improve municipal revenue collection and enable access to additional borrowing capacity.
The directive, notified under Notification No. 3/1/21-1lg3/786 on June 5, 2025, by the Department of Local Government, is a step towards fulfilling the Central government’s condition for states to update property tax floor rates based on prevailing circle rates. This compliance enables Punjab to unlock an extra borrowing limit of 0.25% of its Gross State Domestic Product (GSDP)—a crucial measure to bolster state finances and support ongoing urban infrastructure projects under Central schemes.
Scope of the Revised Property Tax Rates
The revised tax rates are applicable to:
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Residential houses
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Residential flats
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Commercial buildings, including restaurants (excluding multiplexes)
This increase adheres to earlier guidelines issued by the Punjab government on February 14, 2021, and April 26, 2021, which recommended a 5% annual increase in property tax to keep municipal finances in line with inflation and infrastructure needs.
Why the Increase?
The hike is not arbitrary. It’s a strategic fiscal measure aimed at strengthening urban governance and financial sustainability at the municipal level. By aligning its property tax structure with MoHUA norms, Punjab now qualifies for an extended borrowing capacity under central government rules. This translates into greater access to funds for urban development, sanitation projects, affordable housing, and smart city initiatives.
A Push for Stronger Urban Local Governance
Officials from the Local Government Department emphasized that the increased tax will provide local bodies with much-needed financial resources to:
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Improve urban amenities and public services
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Invest in waste management and sanitation
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Modernize city infrastructure
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Maintain parks, roads, and public utilities
The notification is expected to impact property owners modestly while paving the way for significant improvements in urban living conditions.
As Punjab continues to work toward building a cleaner, better-connected, and more livable urban landscape, this measure marks a step in the direction of sustainable municipal finance and better citizen services.
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