Policymakers are entering a crucial period on whether the property tax program will be extended beyond the current pilot cities of Shanghai and Chongqing, sources said.

Hangzhou, capital city of Zhejiang province, is likely to be included in any expansion, the official China Securities Journal reported on Wednesday, citing anonymous sources.

The State Council has approved the proposal by the National Development and Reform Commission, the country's top economic planner, to expand the program.

"Although no clear schedule has been announced, the expansion is highly likely to take place in the second half of the year, with Hangzhou becoming the most likely newcomer to the program," said the source.

Shanghai and Chongqing started to collect property taxes in January 2011.