Govt. move to better the balance sheet of ULBs in Andhra Pradesh

In a major step aimed at making the balance sheet of the Urban Local Bodies (ULBs) look healthier and strengthening the municipal finances, the Government of Andhra Pradesh, led by Chief Minister N. Chandrababu Naidu, has announced a one-time 50% waiver on accumulated interest on property tax arrears for the Financial Year 2025–26.

According to information, the scheme, issued through G.O. Ms. No. 58 by the Municipal Administration and Urban Development (MA&UD) Department on March 16, 2026, enables the taxpayers to clear pending dues by paying the principal arrears along with 50% of the accumulated interest thereon in a single lump sum. The benefit can be availed of until March 31, 2026.

The move comes amid rising arrears of around ₹2,409 crore and uneven tax collection performance across the State.

Of the 123 municipalities, 76 are lagging behind in achieving the expected growth benchmarks under the 15th Finance Commission norms. Officials say the waiver is designed to reduce the burden on the taxpayers, while accelerating revenue mobilisation.

With interest penalties accruing at 2% per month (24% annually), the total penalty pool has touched nearly ₹3,000 crore. The government plans to waive about ₹1,500 crore under the scheme and expects to mobilise ₹500–600 crore within the current financial year through improved compliance.

Municipal authorities point out that while Andhra Pradesh and Telangana maintain a consistent 2% monthly interest rate, resulting in a 24% annual penalty, major industrial hubs like Maharashtra and Gujarat often employ more aggressive measures.

In those States, the municipal corporations have the authority to levy interest rates that can reach up to 4% per month for specific commercial defaults. This means, while a tax debt in Andhra Pradesh takes approximately 4.1 years to double, the same can double in just two years in high-demand urban zones in Maharashtra or Gujarat, says a senior official.

Reform push

As part of a broader reform push, the authorities have also launched a technology-driven exercise to widen the tax base.

Using GIS mapping, officials have identified over 1.07 lakh unassessed properties and 1.04 lakh under-assessed properties, where discrepancies in declared built-up areas are found. This has already increased the overall tax demand by ₹400–450 crore.

The State’s annual property tax demand, including vacant land and government buildings, stands at around ₹2,400 crore, with collection efficiency ranging between 85% and 90%. The government aims to bridge the remaining gap by bringing more properties into the tax net and improving enforcement.

Importantly, all revenues collected under the scheme will remain with the respective municipalities and municipal corporations, enabling them to enhance urban infrastructure and essential civic services such as water supply and sanitation.

Officials have urged the taxpayers, including those residing outside the State, to utilise the one-time waiver before the deadline, noting that stricter enforcement measures will follow in the next phase of the collection drive.

The current 50% interest waiver, valid until March 31, 2026, serves as a critical bridge for domestic taxpayers to regularise their status before the State potentially shifts toward the stricter enforcement protocols seen in other high-penalty industrial States, the officials add.