On Monday, the Union government shared exciting news in the Rajya Sabha: nearly 3,700 local cities and towns (called urban local bodies or ULBs) in India saw their property tax collections grow by 31% in the financial year 2022-23 compared to the year before.
Minister of State for Housing and Urban Affairs, Tokanu Sahu, responded to a question from TMC MP Nadimul Haque about how the government is helping local finances. He explained that the 15th Finance Commission (15th FC) has started new rules to make sure local bodies are collecting property taxes better. For example, they’ve tied funding to how well cities collect these taxes and have required them to share financial reports with the public to improve transparency.
Between 2020 and 2025, cities that performed well received a total of ₹76,580.90 crores in grants. Moreover, 18 states earned extra rewards for their efforts under a special capital investment scheme for 2022-23.
Sahu mentioned that the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) 2.0 now requires cities to reform their property tax systems. This means they must clearly define how property taxes are calculated, have set guidelines for property values, and plan regular increases.
He also highlighted that cities gained ₹315.83 crores in incentives for using bonds to raise money between 2018 and 2024, which helps local financial management. Another key point is that to receive funds for the Swachh Bharat Mission Urban (SBM-U) 2.0, states must align property tax rates with market values and revise them in line with Gross State Domestic Product (GSDP) recommendations.
Lastly, Sahu talked about the Smart Cities Mission (SCM), which has encouraged new ways to finance projects. Through this program, 195 projects worth ₹9,193 crores have been completed using public-private partnership models in 51 cities.
When asked about slow spending of central funds, Sahu assured that money is released only after cities get good reviews from independent monitoring agencies. He added that usage of funds for AMRUT and Smart Cities Mission is impressive, standing at 92% and 94%, respectively, since these programs started in 2015.
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