If residential property is used for commercial purposes proeprty taxes will have to be at commercial rates
it is immaterial if society has objections or not
Running a business from residential property
I am into web design profession on a very small scale, myself along with just 2 staff members. I have purchased a residential property of 225 sq ft carpet area in Mumbai in 2009, I am using this place as my office. Now BMC (Brihanmumbai Municipal Corporation) officer has sent notice stating, since the residential place is used for commercial activity, I will have to pay Property Tax as per commercial rate which is quoted by him is 8.5 times higher then existing rate as residential user. This charges according to him, I will have to pay for last 6 years + panely of 200% In my case, there is no objection by my housing society. Non of my clients visites my place. We just work on phone and internate. Not creating any nuisance. What I have to do? Is I am doing somthing worng? Please Advice Thank You Paresh
Asked 5 years ago in Taxation
9 Answers
Business cannot be run from a residential property whether clients come or not. You should close operations and ask for a reduction in fine. Go in appeal if the authorities do not budge.
No object by other residents have nothing to do with the liability to pay commercial property tax. Your only remedy is to lessen the number of previous years but you will have to pay the commercial tax only.
Dear sir,
The place of the work is not considered but only the nature of activity is given importance. Please note that as per existing tax laws in the country, you will have to pay property tax. The place is used for conduct of business and therefore commercial rate will be applied.
The fact that your housing society has no objection has nothing to do with your tax liability. Thank you.
I do agree with all your guidance, but if we go through this article https://accommodationtimes.com/you-can-use-residential-premises-for-professional-purposes/ It says professionals who use their intellectual skill to provide service and not involve in any Goods sale or purchase, not manufacturing anything, not using premises as storage can use their residential premises for running profession and do not require a change of user. What if I say that I am staying at the same premises and working too from the same place? In my building, there is 2 Flats of Chartered Account 1 Flats of Architech and 2 Flate is of the artist (BA Fine Arts). This BMC Officer is saying all of this flat owner has to pay commercial property tax. What if we state that we are professional and working from home? Can we challenge their decision in court by PIL?
Asked 5 years ago
Lawyers ,CA , architects can use part of residential premises for professional purposes
web designers cannot use residential premises for commercial purposes
You may challenge the notification / circular issued by the BMC officer by way of a Writ or PIL in the BHC. However, please note that the law is laid down and the same is that no residential property can be used by any user for any commercial purposes and if you use any residential property for business purposes you are entitled to pay rentals as per the commercial rate only. Online newspaper articles do not lay down the law.
The law states that the residential property cannot be utilized for commercial purposes without getting proper permission from competent authority to convert the property into commercial property.
Since you received a notice from the authorities concerned it becomes your duty to issue a reply notice denying the allegations.
Later on you can approach the authorities concerned to clarify the details and to regularize the same if possible.
The law is clear that residential property cannot be utilized for commercial activities without obtaining approval for conversion from the authorities concerned.
You cannot claim it as a right even if it is your own property.
However you may decide after consulting an advocate in the local.
Dear sir,
If you call that place as your place of residence, then commercial property tax won't apply. Thank you.