Social media has witnessed an unprecedented growth in users based in low-income communities in the Global South. However, much remains unknown about the drivers of misinformation in such communities. To fill this gap, we conducted an interview-based study to examine how rural and urban communities in India engage with misinformation on WhatsApp. We found that misinformation led to bitterness and conflict – rural users who had higher social status heavily influenced the perceptions and engagement of marginalized members. While urban users relied on the expertise of gatekeepers for verification, rural users engaged in collective deliberations in offline spaces. Both rural and urban users knowingly forwarded misinformation. However, rural users propagated hyperlocal misinformation, whereas urban users forwarded misinformation to reduce their efforts to assess information credibility. Using a public sphere lens, we propose that the reactions to misinformation provide a view of Indian society and its schisms around class, urbanity, and social interactions.