As the Tamil Nadu government has started discussions with world-class economists to explore the feasibility of property tax reforms, the Greater Chennai Corporation is expected to focus on rationalisation of tax rates and on increasing reassessment and its own sources of revenue to fund infrastructure development.
Corporation Additional Commissioner (Revenue and Finance) R. Lalitha says the civic body is set to touch ₹2,000 crore in property tax collection, thanks to a series of initiatives to increase its own sources of revenue. The property tax collection in 426 square kilometres of the Corporation used to be less than ₹1,000 crore a few years ago.
World Bank report
The Corporation has made efforts at increasing its own sources of revenue following reports by the World Bank and the Comptroller and Auditor-General of India. But the ruling Dravida Munnetra Kazhagam and the main Opposition party, All India Anna Dravida Munnetra Kazhagam, have been cautious about increasing property tax rates in Chennai in the past few decades because of the likely impact on elections.
As the AIADMK revised property tax rates a few years after the demise of former Chief Minister Jayalalithaa, residents opposed the decision, and the revision was rolled back before the 2021 Assembly election. However, Chennai voters defeated the AIADMK in the election because most of the residents’ welfare associations opposed the revision.
J. Nagabushanam, secretary, Venkatraman Nagar Residents’ Association, Korattur, says residents have started questioning the rationale behind the increase in property tax rates after the floods. “We objected to the increase. The AIADMK government raised the tax rates. We objected. So, it was rolled back. However, the DMK government increased the tax by a smaller percentage. The DMK government should be careful not to cast any burden on the residents by increasing the property tax rates. After the rise in the property tax rates, Metro Water tax was increased. We will be happy if they don’t increase the taxes any further in the name of reforms.”
‘Very high for new buildings’
“The new tax assessment for new buildings is very high now. For the new building, they are charging very high. But DMK councillors will not talk about this at the Corporation Council. They say it is a policy decision of the government,” says Mr. Nagabushanam.
“We have no facilities. What is the benefit of increasing the tax for members of the public? I have been a secretary for 50 years. Civic infrastructure has not improved. Flooding was a problem last year. We went in a boat as the floodwater stood 3-4 feet high. The Chief Secretary was visiting some areas the other day to improve flood preparedness. We will be happy if the projects are completed, with funds allocated for the right projects,” he says.
‘Residents not happy’
AIADMK councillor J. John says the Mayor blamed the Union government for the tax increase. “The Chief Minister [M.K. Stalin] opposed the property tax increase when the AIADMK was in power. Now, the tax has been revised, and the court has also supported the revision. But the residents are not happy,” he says.
Former AIADMK floor leader V. Sukumar Babu says, “In 1998, a resolution was passed for revision of the property tax. But it was shelved because of the Lok Sabha election. Later, the Corporation started collecting property tax arrears after 2003. The residents are angry. They will vote against the DMK in the city in the 2026 Assembly election, if the property tax remains high.”
Residents have also pointed to the problems in getting assessment orders for new houses and flats in the city, claiming that the councillors have asked officials to bring the new applications to their notice before assessment. This has been causing a delay in assessing property. Residents also accuse a few councillors of demanding bribes.
Velachery resident S. Kumararajaa says the residents have suffered because of the increase in the residential and commercial tax rates. They have demanded reintroduction of self-assessment of property tax, which has been stopped by the Corporation. Other cities in the country have been permitting self-assessment of property tax for buildings.
Use of property
Another issue is the change in the use of property from residential to commercial. As the metropolitan area is expanding, the core city of Chennai has witnessed a rapid change in the use of property. A large number of properties in the 15 zones of the Corporation are classified as commercial. But the Corporation’s estimates point to a rise in the use of residential properties for commercial purposes, accounting for 60% of the total assessees in some of the developed areas of the city.
Currently, the city has 11.45 lakh residential properties, one lakh commercial properties, and one lakh mixed-use properties. Once the correct use is identified, the Corporation is expected to generate a huge revenue by updating its database suitably. The use of technology has also been promoted in property tax assessment, collection, and resurvey. It has led to an increase of 60% in online collection. However, the technology has not yet been used for improving the civic body’s own source of revenue because of local political issues.
