At some point, we all manage to buy our dream home; some buy property soon, some late. So when you own a property, that makes you the authorised person to pay the property tax in order to help the municipal authority to maintain the infrastructure around your property. Let's just suppose that for some other reason, if you default on paying the tax, the civic body imposes a penalty and an interest on the amount due. That is where the amnesty scheme comes into the picture. Amnesty Scheme is a scheme that will enable property tax defaulters to pay their dues with some relaxation. Relaxation can be given in the form of rebates in tax, penalties, and interests. These amnesty schemes are released periodically by the municipal departments.
The very first GST Amnesty Scheme was first introduced to cover periods from July 2017- to September 2018. Because the pandemic had affected the whole world, tax professionals urged the government to initiate the reopening of the GST amnesty scheme.
What is the Amnesty Scheme?
In layman's terms, a property tax amnesty scheme is the rebates that the municipal departments offer in order to provide a way out to the property tax defaulters so that they can clear their dues. Because many people tend to underreport their earnings to circumvent their taxes, this particular trick of tax defaulters shrinks the tax base, which eventually leads to the government's ability to fulfil socio-economic goals. So the scheme offered by the government allows tax evaders to become tax cooperatives without getting involved in legal proceedings.
On different property tax components, different relaxation and rebates are offered. At the time of unpaid tax, the municipal departments offer amnesty schemes to increase their income. Municipal departments occasionally motivate defaulters to clear out their dues and enjoy some benefits by periodically providing amnesty schemes. The amnesty schemes are basically made around three prominent components-
Principal property tax amount
Penalty for not paying at the given time
The interest levied on the total amount
Combining these three components creates a huge amount that makes it difficult for middle or low-class people to pay. Along with this, additional penalties are often imposed, which makes it even more difficult. With the introduction of amnesty schemes, periodically, tax defaulters witness an opportunity to clear all their dues with relief.
People who are tax defaulters can also visit municipal offices near their locality and get an estimate of dues and make payments during the given period; in this form, they can leverage the scheme. Clauses that are associated with the schemes are subject to the property location, category, defaulter period, and other factors.
In budget 2022, a new provision was proposed on Section 139 (8A), which enabled the filing of updated returns only on payment of tax and an additional tax of 25% or 50%. In order to avoid tax ingenuity, Section 139 (8A) has a list of non-qualifying cases- search and survey cases, cases under assessment, and revision of income within regular timelines. The scheme is beneficial; that will enable the tax defaulters to declare the income that was missed before while filing on return and will protect the taxpayers from undue stress. The amnesty scheme is set to be beneficial for the government. They will be collecting additional revenues, which will bridge the gap between projected tax revenue and actual numbers.
How can you take advantage of Amnesty Schemes?
The more aware you are of the announcements made, the more benefits you will get to enjoy. Local municipal authorities release the amnesty schemes in stages. After the announcement, property taxpayers can pay the amount which is due, either online or offline. If they decide to pay offline, they will have to visit the nearest municipal department and can pay via cash, card, and demand drafts. Whereas if chosen to pay online, then payers have to visit the website of the respective municipal department and create an account; there, they will get to know their due amount and can pay online using payment gateways.
Advantages of property tax amnesty scheme
The defaulter as well as the municipal authorities get benefits out of the property tax amnesty scheme. With the help of the schemes offered by the authorities, taxpayers can get a waiver on penalties and interest imposed to a certain amount. Moreover, taxpayers have the liberty to clear their dues in one go without any interruptions.
If one fails to pay their property taxes, it will lead to legal issues. Implications vary from case to case and can lead to the recovery of dues, additional fines, and imprisonment. At the time of selling the property, it is mandatory for owners to present proof of all dues paid. Failing to provide receipts of property tax payments leads to the cancellation of the deal.
Municipal departments also get benefits from amnesty schemes as annual proceeds also increase.
Amnesty schemes in Maharashtra
Maharashtra recently cleared the bill implemented on the GST amnesty scheme that was announced in the state budget for pending sales tax. To avail of the benefits under the scheme will be April 1 and September 30,22. Dealers will have to withdraw their pending appeals in order to avail of this benefit. Dealers having liabilities up to Rs 10 Lakh will have the option to pay 20% of the total amount in one go, and a waiver will be granted for the remaining amount.
Amnesty schemes in Delhi NCR
The schemes are divided into 3 branches of the Municipal Department- East, North, and South Delhi Corporations. Based on the factors like tax defaulter's tenure, locality, property type, area, and many more, amnesty schemes are categorised. At this moment, a penalty of 1% of the tax amount per month is imposed on taxpayers. Penalty and interest are also charged upon the principal tax amount.