What Happens if Property Tax is Not Paid in India (2024)

Puja12

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Many times people wonder “

what happens if I don't pay property tax”

The answer to this question is there can be several consequences. It includes legal actions and financial penalties. Property tax is a local tax imposed by municipal corporations on property owners.

Here are some

penalty for non payment of property tax

:

• If you fail to pay property tax on time, you are subject to interest charges. These penalties can be much higher over time.

• Municipal authorities can take various actions including sending notices, attaching a lien to the property, or even initiating legal proceedings to recover the unpaid taxes.

• The municipal authorities can take possession of the property and auction it to recover the outstanding taxes.

• They can also withhold property-related documents such as khata or occupancy certificates.

• If there are arrears, you can have restrictions on property redevelopment or renovation projects.

Property tax rates vary from one municipality to another. Make sure to check with your local municipal corporation for specific guidelines and deadlines. These are the complete details on

what if I don't pay property tax.

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Amit Chaturvedi

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To cover the maintenance and extension of public amenities like streets, parks, street lights, sewage systems, and other public services, property owners must pay property taxes. It is based on the property's assessed value, which is dependent on factors like location, size, kind, and usage. But how long can you go without paying property taxes in India? Let me tell you about it.

What happens when property taxes are not paid?

There are a number of implications for not paying property taxes on time, some of which include:

• Interest and a penalty charge

• Municipalities have the right to impose interest and penalties for the amount of unpaid property taxes.

• It can result in a higher overall tax obligation.

Legal implications:

If property taxes are not paid what happens, the municipal authorities may take legal action as a result of unpaid property taxes, including

• sending notices,

• levying penalties, and

• selling the property at auction in order to recover the outstanding tax amount.

Loss of ownership rights to property:

• If property taxes are not paid for a long time, the local government may begin the process of selling the property to collect the unpaid tax obligations. As a result, the property's ownership rights may be forfeited.

Difficulty in obtaining necessary permits and approvals:

• Lack of payment of property taxes can make it more difficult to get the necessary permits and permissions, as well as clearances from municipal authorities for construction projects or transactions involving real estate.

Detrimental effect on credit score:

• If you wondering what happens if we don't pay property tax, the property owner's credit rating may be impacted by unpaid property taxes.

• Municipal agencies might inform credit bureaus about the default, which could have an impact on the person's creditworthiness

Now you know how long can you go without paying property taxes in India.

Legal solutions simplified: NoBroker, your trusted advisor.Read More:How to Calculate Commercial Property Tax?What is the Property Tax Delhi Last Date?What is the Age Factor in Property Tax Calculation?

Rashmi Sinha

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Not paying taxes within the stipulated time can cause you a lot of damage. Each and every state might have a rule of its own and take charges for it but overall if property tax not paid is considered a criminal offence. As per the Income Tax Act of 1961 under

Chapter XXII, tax evasion can make you pay hefty penalties or even can make you go to jail. My uncle moved to America 12 years ago and now when he came, he realised that the

property tax not paid for 10 years. Now he was lucky to have been able to afford to pay the hefty penalty charges, but if in case he had failed, he would have been jailed.

What happens if property tax not paid?

In Tamilnadu, if you do not pay property tax, a penalty of 2% will be levied upon you to the assessed value after the end of the incentive period 15 days of the tax cycle.

In Delhi, for the non payment of property tax, the government imposes a penalty of 1% on the amount due per month. BBMP charges a penal interest of 2% per month. Now if property tax not paid for 3 years, can you imagine how much the amount is going to be in the end?

However, do understand that you will be given a chance to showcase why you failed to pay it. If you have a valid reason, your penalty charge might get adjusted but if you are proven to be a wilful defaulter, you can be jailed.

I hope you have understood what will happen if property tax not paid for 10 years. It is better to visit the Municipality if you are unable to pay the tax and discuss the same with them.

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Namrata Nath

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I have read what Ms R.Saumya has written about ‘what happens if you don't pay property tax in India?’ and I can say that if you fail to pay property tax you can be penalised heavily. If property tax is not paid on time the municipal corporation has the power to even seize your property. Speaking of property tax Bruhat Municipal Corporation’s authority has said “First, we are targeting commercial properties, then we will move to residential and individual properties. We will seize valuables, including furniture, from defaulters if they fail to pay their dues,". That’s daunting, isn't it?

So, anyone who owns a property be it a commercial or residential needs to pay property tax on time. This is required for the government authorities to improve the civic facilities.

Now that we know ‘what will happen if property tax is not paid’, let us learn how property tax is calculated. Property tax is calculated on the basis of the percentage of the annual rental value, capital value, or unit area value of the property. You need to check with your municipality to understand how your property tax is calculated since the process to calculate the property tax varies from one municipality to another.

You can visit the municipality office and pay the tax offline. Or you also visit the bank branches for the same. To pay property tax online you need to visit the official website of your municipality corporation and you need to fill up details such as property tax number, house number, address, and bank details to pay the tax.

I must let you know that without paying your tax, you won't be able to sell your house. Your buyer will purchase the house after the clearance of the property tax. This is why you should always pay your property taxes. Do keep your property tax receipt as proof of payment.

I hope you understand ‘what happens if you don't pay property tax in India?’.

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R.Soumya

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Property tax is paid by the property or land owners of a state to the municipal authorities so that they have access to basic maintenance, civic amenities and good infrastructure in the area. It is mandatory to pay the property tax on real estate. But what happens if property tax is not paid in India? Well you will be subjected to many consequences. I am going to share a few important insights that you must be aware of to know what happens if property tax is not paid.

What if property tax is not paid?

Okay, so here is a list of things and consequences of not paying property taxes for your reference. If anyone around you is thinking of property tax evasion, then you must show this answer to them.

• The local authorities upon finding tax evasion can seize your property

• You can face legal actions by the tax authorities under the state act and will be liable to pay penalty, interest

• Your property can be auctioned off

• Your property can be sealed if you default

Who should pay property tax?

Any individual, business or industry who owns a property must pay the property tax to the municipal authorities of the state.

Who is exempted from paying property tax?

There are a few categories where property tax is charged at a lower rate or not at all. If you have agricultural land or land used for a place of worship then there is no property tax applicable. Property tax rebate options are available for senior citizens, women, disabled or ex-serviceman, etc.

Who is liable to pay property tax, click here to know