The Pune Municipal Corporation (PMC) is facing a ₹2,500-crore property tax arrears problem in the city’s 32 newly merged areas, putting pressure on its finances and raising concerns over revenue collection for civic infrastructure.
The tax dispute has emerged from resistance among residents of the merged suburban areas, who have questioned the collection of municipal property taxes without a corresponding improvement in civic services. The issue has also become a subject of political debate, with opposition to tax recovery contributing to delays in collecting the outstanding amount.
Tax Arrears Accumulate Across 32 Merged Areas
The outstanding property tax has accumulated across two phases of Pune’s municipal expansion.
Nine villages were merged into PMC limits in 2017, accounting for approximately ₹1,400 crore in unpaid property taxes. Another 23 villages added to the municipal limits in 2021 account for around ₹1,100 crore in arrears.
Of the total ₹2,500 crore outstanding, approximately ₹1,650 crore is the principal tax amount, while another ₹850 crore has accumulated as interest.
PMC officials have attributed the delay in recovery to a policy deadlock involving the state government and political opposition to tax collection in the merged areas.
State Government Order Affected Tax Recovery
The issue dates back to an October 2024 decision by the Maharashtra government to halt property tax recovery in the 32 merged areas. The government also directed that civic taxes should not exceed twice the rates previously charged by the respective gram panchayats.
The decision has affected PMC’s ability to recover property tax from the newly incorporated areas. According to civic officials, discounted tax rates had already been applied in these locations for nearly five years. Following that period, regular municipal tax rates were introduced in accordance with applicable provisions.
Residents, however, have challenged the higher tax demands on the grounds that the civic facilities available in their localities do not match those provided in established parts of Pune.
Residents Raise Concerns Over Civic Amenities
Residents of the merged areas have argued that they should not be required to pay full municipal property taxes without receiving comparable civic services.
Issues raised by residents include inadequate drinking water supply and limited improvements in local infrastructure. They have therefore resisted PMC’s efforts to recover the outstanding property tax.
The dispute has created a gap between PMC’s revenue requirements and residents’ expectations regarding civic services.
Baramati MP and NCP (SP) leader Supriya Sule also raised the issue during a recent meeting. She argued that tax relief promised to residents of the merged areas should continue, citing the lack of adequate civic facilities.
PMC Faces Revenue Shortfall
The property tax dispute is affecting PMC’s revenue projections. The civic body had estimated ₹675 crore in property tax collections from the newly merged areas during 2026-27.
However, collection remains significantly below the expected level. Of approximately 4.40 lakh properties located across the 32 merged areas, only around 1.10 lakh property owners have voluntarily paid their dues.
The remaining 3.30 lakh property owners have withheld payments, contributing to the current ₹2,500-crore arrears.
For PMC, the delayed recovery represents a substantial loss of expected revenue at a time when the corporation needs funds for infrastructure and civic services across an expanding urban area.
The situation has created a difficult balance for the Pune civic body. PMC needs additional revenue to provide services and develop infrastructure in the merged areas, while residents argue that improvements in civic amenities should precede the imposition of higher municipal taxes.
The continuing disagreement between the civic administration, state government and residents has delayed a resolution.
With ₹2,500 crore in property tax arrears now outstanding, the outcome of the dispute could have a significant bearing on PMC’s finances and its ability to fund infrastructure development in Pune’s newly merged areas.
