State moves to modernise municipal governance with key amendments

In a step towards strengthening urban governance, Rural Development and Panchayat Minister Anirudh Singh on Tuesday introduced the Himachal Pradesh Municipal (Second Amendment) Bill, 2025 in the Assembly. Presented in the absence of Urban Development Minister Vikramaditya Singh, the Bill seeks to upgrade the Himachal Pradesh Municipal Act, 1994, by addressing gaps in accountability, streamlining administrative processes and aligning the Act with current socio-economic realities.

A major focus of the amendment is financial transparency. The existing audit structure for municipal accounts has long required firmer statutory grounding. To rectify this, the Bill places municipal audits under the technical supervision of the Principal Accountant General (Audit), Himachal Pradesh. This move is expected to bring greater consistency, credibility and oversight to the financial management practices of urban local bodies across the state.

The legislation also resolves long-standing ambiguities related to the tenure of municipal members whose jurisdictions later fall under municipal corporations. By clearly defining their continuation or cessation, the amendment aims to smoothen transitions during jurisdictional changes. Similarly, the resignation process for municipal members has been streamlined. A time-bound system for acceptance and mandatory reporting of vacancies has been introduced to prevent procedural delays and ensure administrative continuity.

In an effort to bolster municipal revenues, the Bill proposes that unpaid user charges, often a source of leakage, be treated as arrears of property tax. This change will strengthen recovery mechanisms and improve civic revenue stability.

Penalty provisions under the 1994 Act, many of which have remained static for years, are also being rationalised. Updated fines aim to make enforcement more effective in areas including building regulations, sanitation, public health, licensing violations and election-related misconduct.

A forward-looking feature of the Bill is the introduction of an incentive framework for prompt payment of corporation tax. The civic body will be authorised to notify incentives such as deductions or other benefits for taxpayers who pay within prescribed deadlines. Municipal officers will verify eligibility, ensuring that only taxpayers who have cleared all dues, past and present, receive incentives. Importantly, penalties, interest and recovery provisions will remain fully enforceable for defaulters, preserving the deterrent value of existing laws.

Collectively, these amendments aim to modernise municipal administration, promote fiscal discipline and enhance the efficient functioning of urban local bodies across Himachal Pradesh.

A Bill built for tomorrow 

• The Bill aims to reduce ambiguity in municipal functioning and introduce incentive-based tax compliance. Audit reforms, revenue strengthening and rationalised penalties form the backbone of the proposed changes
• This amendment package is state’s attempt to future-proof its cities. By tightening audits, updating penalties, boosting revenue tools and introducing smart tax incentives, the state is steering municipal bodies toward sharper discipline and cleaner governance
• It plugs loopholes that have lingered for years and gives officials the clarity and authority they need to function without hesitation. The reforms push local bodies to be financially responsible, technologically aligned and citizen-focused