Commercial establishments in gram panchayats to be taxed from 2025-26; final decision pending cabinet approval
Shimla: The Himachal Pradesh government is set to tax commercial buildings in villages, extending urban-style taxation to gram panchayats. Hotels, shops, homestays, restaurants, marriage palaces, and other commercial establishments will be charged per square foot, with the new tax expected to be implemented from the financial year 2025-26.
The move, aimed at strengthening the financial position of gram panchayats, has been prepared by the Panchayati Raj Department and presented to Chief Minister Sukhvinder Singh Sukhu. According to Rural Development and Panchayati Raj Minister Aniruddh Singh, domestic consumers will remain exempt, and the department will soon issue formal guidelines on tax collection.
With Himachal Pradesh facing financial constraints, the state government has been exploring ways to generate additional revenue. Last year, it introduced drinking water bill collections in rural areas, and now, commercial taxation in villages is the next step. While the exact tax rate per square foot is yet to be finalized, the proposal is under discussion at the departmental level. The cabinet is expected to take the final call, and an official announcement may be made during the upcoming budget session.
Panchayats Already Levying Local Taxes
Under the Panchayati Raj Act, gram panchayats can impose various taxes. Many have already implemented local levies, such as the Chulha tax, which charges ₹30 per year per household. In Kangra, some panchayats have collected an eight-year lump sum of this tax. Now, with commercial taxation on the horizon, the government hopes to provide gram panchayats with a stable financial resource for local development.
The timing of the decision is critical as Himachal Pradesh gears up for panchayat elections later this year. Whether the move will be welcomed by rural business owners or spark opposition remains to be seen. However, the government is positioning the new tax as a step towards empowering panchayats, ensuring they have adequate funds for infrastructure and public welfare projects.