A decision to this effect was taken in a meeting of Punjab leaders led by state convener Sucha Singh Chhottepur with AAP leader Arvind Kejriwal.
"AAP's policy is to field candidates with clean and honest record...With little time left as the nominations for the civic polls have already begun so the party has decided not to contest the elections," Chhottepur said.
AAP, which won four seats in Lok Sabha polls from Punjab, will contest the 2017 Assembly Elections in the state, he said.
Punjab Government has made a mockery of the democratic setup at the local body level by delaying the local bodies' elections by one year even when there is no provision in the constitution to extend the term of local bodies, he said.