The number of new homebuyers is increasing across the country. According to a report, total sales in the top seven cities are expected to exceed 3.6 lakh units in 2022. The rising house-buying trend makes it essential to be aware of property tax and the implications of not paying it.
Municipal authorities collect property tax from house/flat owners falling in their jurisdictions. Not paying property tax can have some repercussions. Municipal corporations often adopt strict measures against willful defaulters who fail to pay the property tax within the deadlines.
Legal experts say that the consequence/penalty of not filing property tax differs on the basis of which municipal authority the property falls within.
For example, the Municipal Corporation of Delhi (MCD), imposes a penalty of 1% on the amount due per month. Bruhat Bengaluru Mahanagara Palike charges a penal interest of 2% per month.
In case of failure to pay property tax on time, the concerned municipal authority can also issue a show cause notice to recover the dues.
“However, even pursuant to the issuance of show cause notice if the property owner fails or avoids paying the said taxes, then in that event, the concerned municipal authority can proceed as per the advice of the law,” says Ashutosh K. Srivastava, Senior Associate at SKV Law Offices.
For example, under the DMC Act, 1957, the municipal authority can recover the due amount under Sections 155 and 156 of the said Act by attachment of property, bank account, rent and all movable properties.
“In Delhi, defaulters often receive show-cause notices upon default in paying the property tax. In the event the defaulter’s show-cause notice is overlooked or ignored, the municipal corporation will likely impose a penalty of 20% of the amount of tax that may be recoverable from the defaulter,” says Suvigya Awasthy, Associate Partner at PSL Advocates & Solicitors.
“In case of non-payment even after the imposition of penalty, the municipal corporation may proceed to recover the dues by way of attachment of movable property in accordance with the provisions of the statute book,” Awasthy adds.
Some of the punitive measures taken by municipal authorities in case of non—payment of property tax include:
- Show-cause notice
- Attachment of Property, bank account, rent and all moveable properties in extreme cases
- Wilful defaulters may also attract rigorous imprisonment and a fine