Bhagalpur: The Bihar government has ordered an inquiry into allegations that residential properties in Bhagalpur are being wrongly classified as commercial for the purpose of levying higher holding tax.
The department of urban development and housing has sought a detailed report from the municipal commissioner within a week after taking cognisance of a complaint filed by a local representative.
In a letter issued by joint secretary Sanjay Kumar, the commissioner has been directed to examine all aspects of the complaint, take action in accordance with rules, and submit a point-wise report to both the department and the complainant, Pratik Jhunjhunwala.
Election commission also steps in
The state election commission has also taken note of the matter and written to the district magistrate, seeking clarification on the issue of commercial holding tax.
Dispute over property classification
The complaint, submitted on March 1 by Jhunjhunwala of Devyogi Consultants, alleges that the municipal corporation is declaring residential properties as commercial simply because they have been rented out.
He argued that such classification is arbitrary and contrary to established norms, stating that the nature of a property should be determined by its usage rather than the income it generates.
“If a tenant is using a property for residential purposes, it must be treated as residential,” the complaint states, adding that rental income alone does not alter its classification.
Legal grounds cited
The complainant has cited provisions under the Income Tax Act and the GST framework, noting that rental income is categorised as “income from house property” and that residential rentals are generally exempt under GST.
He also referred to judicial precedents to argue that the classification adopted by the municipal corporation lacks legal basis.
Allegations of revenue-driven approach
The complaint further alleges that the reclassification of properties is being carried out to increase municipal revenue. It contends that declaring an entire building as commercial is unjustified, and that only portions used for commercial purposes—if any—should be taxed accordingly.
Officials are expected to review the matter and submit their findings within the stipulated timeframe, as the issue draws wider attention over taxation practices and regulatory compliance.
