The number of new home buyers is increasing across the country. Total sales in the seven largest cities are expected to exceed 3.6 lakh units in 2022, according to a report. The uptick in home buying makes it imperative to stay on top of property taxes and the implications of not paying.
Local authorities collect property taxes from owners of houses/apartments in their jurisdiction. Failure to pay property tax may have consequences. Local authorities often take strict action against those who do not pay their property tax on time.
Legal experts say that the consequence/penalty for not reporting property tax varies depending on the local authority the property belongs.
For example, the Municipal Corporation of Delhi (MCD) imposes a penalty of 1% on the amount due each month. Bruhat Bengaluru Mahanagara Palike charges late payment interest of 2% per month.
If the property tax is not paid on time, the competent municipal authority can also issue a collection notice.
“However, in such a case, even under the issuance of a reasonable cause notice, if the owner of the property does not pay or avoids the established taxes, the affected local authority may act in accordance with the recommendations of the law,” he said. Ashutosh. K. Srivastava, Senior Associate at SKV Law Firm.
For example, under the DMC Act 1957, the local authority may collect the amount due under Sections 155 and 156 of that Act by seizing property, bank accounts, rents, and all tangible property.
“In Delhi, defaulters often receive delinquent notices because they have not paid property tax. In case the non-compliant polluter is not notified or ignored, the municipality is likely to impose a penalty of 20% of the non-compliant polluter’s recoverable tax amount,” says Suvigya Awasthy, associate partner at PSL Advocates & Solicitors.
“In case of non-payment even after the sanction has been imposed, the municipal corporation may proceed to collect the debt through the confiscation of personal property in accordance with the provisions of the disentailment laws,” adds Awasthy.
Penalties imposed by local authorities for non-payment of property tax include:
show cause note
Seizure of property, bank account, rent, and all personal property in extreme cases
Willful violators can also be punished with a severe prison sentence and a fine.