In matters that are considered complicated, we tend to believe any opinions that come our way. However, in matters as serious as property, public opinion should not be our guide. If you recently bought a property, it is important to understand your tax liabilities. Any confusion in this regard can cause major financial losses.
We bust five common myths involving property tax in India:
Myth: Property tax can be paid anytime
Fact: You can pay your property tax on both a semi-annual and an annual basis. In case of a delay in payments, a penalty is charged. However, municipal bodies are often seen extending schemes to encourage taxpayers to make payments by waiving penalty amount by a huge margin.
Myth: My tenant will pay property tax on rented unit
Fact: As the owner of the property, a landlord is responsible for paying the property tax, and not the tenant. It is illegal to force your tenant to do the same. In many countries, tenants are responsible for paying this levy, unlike India.
Myth: The Central government decides the rate of property tax
Fact: Land in India is a state subject and district municipal bodies assist them in collection of property tax. Typically, urban-local authorities are responsible for evaluating your property and collecting taxes accordingly. Your property tax amount includes utility bills such as power, water and drainage.
Myth: I can in any circumstance avail of a rebate if I am a senior citizen, a woman or a differently-abled person.
Fact: This is true as long as your property is not given on rent — this means the property must be self-occupied for you to claim rebates. You can also enjoy concessions if your property falls in a location that is prone to natural calamities or if you are a former staff of the Indian military services. In case you have rented out your property, you will have to pay taxes under the provisions of the ‘income from house property’ of the Income-Tax Act.
Myth: I can get away with defaults by paying a fine
Fact: Well, most of the times. Municipal bodies impose an interest on dues as penalty for non-payment. However, non-payment of property taxes for a long time might also force the municipal body taking over the property and selling it in the market to recover dues. There have been many such instances in major cities where a municipal corporation ended up auctioning the property to recover property tax dues. In February 2019, for instance, the Pune Municipal Corporation seized as many as 600 properties with a market value of Rs 500 crore over non-payment of property tax dues.