PUNE: The civic body that faced revenue losses in the 2024-25 fiscal owing to ongoing legal disputes regarding property tax in merged areas might encounter the same challenges in the 2025-26 financial year, as the state government maintains its ban on tax recovery.
In 2024, the state mandated a halt to property tax collection from merged regions and ordered the Pune Municipal Corporation (PMC) to limit property tax to no more than twice the rates previously set by the grampanchayats, following complaints from residents of the newly integrated areas about high civic taxes.
The absence of specific regulations within the Maharashtra Regional and Town Planning (MRTP) Act of 1966, which restricts tax rates to double those of the prior grampanchayat taxes, prompted the civic administration to cease collecting property dues, resulting in an ₹80 crore loss last fiscal year.
The PMC aimed for ₹2,492.83 crore from building permissions in 2024-25, alongside an expected ₹2,549.79 crore from property tax. Ultimately, the PMC’s property tax department reported earnings of approximately ₹2,360 crore, whereas the building permissions department generated about ₹2,600 crore.
Although property tax revenue is typically the largest income source for the civic body, the building permissions department outperformed it for the second consecutive year.
The PMC recorded approximately ₹2,268 crore in property tax revenue during the 2023-24 fiscal year. “Despite the villages being merged into civic limits, the building permission revenue is handed over to PMRDA. PMC is responsible for all essential services, yet city area taxpayers bear the burden of financing infrastructure projects for the merged regions. This situation is unjust for residents within civic areas,” said Prashant Badhe, a former PMC corporator.
According to officials in the property tax department, attempts were made to identify properties for tax inclusion, which led to revenue increases, but these efforts still fell short of targets.
Civic officials estimate that ₹1,245 crore is owed from tax collections in the 34 merged areas. A drive was initiated to seal properties of defaulters; however, it was halted following complaints from local leaders and residents regarding high charges, in addition to political pressure.
“The civic administration cannot independently make this decision. The state government will need to amend the law before any tax reductions can take place. Such decisions need to be implemented retroactively,” stated Ujawal Keskar from Aaple Pune, Apala Parisar organization.
“There is no legal foundation for levying twice the tax in comparison to grampanchayat rates as mandated by the state. Although this directive has been reiterated, it lacks clarity on how to enforce it without legal support. We await detailed administrative orders,” noted a senior PMC official.
The state’s directives emerged after a review meeting led by Deputy Chief Minister Ajit Pawar, also the state finance minister, held in Mumbai on Tuesday. “These matters have been unresolved for years. The administration should ensure basic amenities are provided in the merged areas, and tax recovery efforts need to be paused,” Pawar emphasized in the meeting.
