Many in Chennai are upset with the Greater Chennai Corporation (GCC) for the hefty property tax claims they are being served this year.

Some property owners have seen their tax assessment increase by up to five times of what they normally pay.

The corporation has clarified it is not enforcing a sweeping revision of tax rates but a correction of underassessment wherever there was wrong declaration of property size or type.

Underassessment of municipal taxation is a problem across metros in India, due to three types of infirmities in the process: many properties go unassessed; valuations are outdated; and since there is self-assessment, owners deliberately understate the extent or type of property they own.

All three give room for corruption, which we know is rampant, and contribute to shoddy services, which is everyone’s experience. According to the Ministry of Urban Development, more than 50% of properties in India’s major cities are underassessed, leading to a leakage of hundreds of crores.

For better realisation, the 15th Finance Commission recommended GIS-based property mapping and revaluation in 37 municipal corporations across the country.

In 2018, GCC carried out a self-declaration exercise which unearthed 1.5 lakh cases of deviation. Subsequently, a GIS survey by a private agency was commissioned and the number of underassessed properties rose to 3 lakh, both commercial and non-commercial.

In the present drive, GCC has slapped higher claims on three lakh assessees and hopes to net additional revenue per annum.

That extra revenue may seem like a small increment to the GCC’s annual revenue but better realisation of property tax can make a significant difference to the corporation’s ability to fund its civic services without asking for a bailout by the State government. For 2026-27, GCC’s target for property tax is Rs 2,450 crore.

That accounts for 32% of its total revenue expenditure of Rs 7,717 crore; in reality, collections in recent years have been inching up to about 22-25%.

The under-realisation forces GCC to slow down payments for some services in the last few months of the financial year or cut back on some projects altogether.

The reality is that GCC’s own-source revenues (property tax, professional tax, fees, user charges, and other revenues) pay for only 62-63% of its budget, the balance coming from borrowings and handouts from higher government. Depending on the latter is particularly unfair: it amounts to asking people in the rest of the State to pay for the comfort of Chennaiites.

Viewed in a larger perspective, the property tax system prevalent in India is by and large friendly to the owner. Many municipalities allow him or her to self-assess. In the US and much of Europe, property tax is linked to a market value determined by a government assessor or private agency and the tax rate can range from 0.5% to 3% of assessed value.

That’s a substantial impost because it is meant to pay for local schools, roads, police, fire services, and sanitation. In India, most of those services are billed to the State government.

In India, appropriate collection of property taxes might seem a burden but it could bring about some good tradeoffs.

Rate-paying citizens would feel more invested in the city and demand accountability for the way the commons are used and services are maintained. Tough questions could then be asked about the efficient deployment of resources.