Property Tax in India – How It's Calculated, Payment Process & State-wise Guide 2025

Own property? You must pay property tax!

Many property owners are confused about property tax – how much to pay, when to pay, and what happens if you don't pay. Let's clarify everything.

What is Property Tax?

Property tax = Annual tax levied by Municipal Corporation/Municipality on property owners.

Also called:

• House tax

• Building tax

• Municipal tax

Levied on:

• Residential properties (houses, flats, apartments)

• Commercial properties (shops, offices)

• Vacant land (in some areas)

• Industrial properties

Purpose:

• Fund municipal services (water, sewage, roads, street lights)

• Maintain infrastructure

• Public facilities

Paid to: Local municipal corporation/municipality, not state or central government

Who Must Pay Property Tax?

✓ Property owners – Houses, flats, commercial buildings✓ Landlords – Even if property is rented (not tenant's responsibility)✓ Commercial property owners – Shops, offices, factories✓ Vacant land owners – In some municipalities

Not applicable to:

• Tenants (unless specific agreement)

• Government properties (usually exempt)

• Religious/charitable institutions (exempt)

How Property Tax is Calculated:

Different methods in different cities:

Method 1: Annual Rental Value (ARV) System (Most Common)

Step 1: Determine Annual Rental Value = Expected annual rent if property was rented

Step 2: Apply property tax rate = ARV × Tax Rate (%)

Example:

• Your property in Mumbai

• Could fetch ₹30,000/month rent = ₹3,60,000/year (ARV)

• Property tax rate: 15% (assumption)

• Property tax = ₹3,60,000 × 15% = ₹54,000/year

Tax rate varies: 5-30% depending on city and property type

Method 2: Capital Value System (CVS)

Based on property's market value

Formula: Property Tax = Market Value × CVS Rate

Example:

• Property worth ₹1 crore

• CVS rate: 0.2%

• Tax = ₹1,00,00,000 × 0.2% = ₹20,000/year

Used in: Some Bangalore areas, few other cities

Method 3: Unit Area System (UAS)

Based on property's built-up area

Formula: Tax = Built-up Area (sq ft) × Rate per sq ft × Factor

Factors include:

• Usage (residential/commercial)

• Location

• Age of building

• Type of construction

Example:

• 1000 sq ft flat

• Rate: ₹10/sq ft

• Residential factor: 1.0

• Tax = 1000 × 10 × 1.0 = ₹10,000/year

Used in: Delhi, many North Indian cities

Factors Affecting Property Tax:

✓ Location – Prime areas = higher tax✓ Property size – Larger = more tax✓ Property type – Commercial > Residential✓ Age of building – Older buildings may get rebate✓ Usage – Owner-occupied vs rented✓ Amenities – Lift, parking, swimming pool increase tax✓ Floor – Higher floors sometimes taxed more

State/City-wise Property Tax Rates (Approximate):

Mumbai (BMC):

• Residential: 4-6% of rateable value

• Commercial: Higher

• South Mumbai: Premium rates

Delhi (MCD):

• Unit Area System

• ₹4-12 per sq ft (residential)

• ₹20-100 per sq ft (commercial)

• Depends on locality

Bangalore (BBMP):

• ARV system

• Residential: 20-25% of ARV

• Commercial: 30-35% of ARV

Chennai (Greater Chennai Corporation):

• Half-yearly

• Based on plinth area and location

• ₹1-20 per sq ft

Hyderabad (GHMC):

• Based on capital value

• 0.1-0.25% of property value

Pune (PMC):

• ARV system

• 10-30% depending on zone

Kolkata (KMC):

• ARV-based

• Residential: 15-20%

• Commercial: 20-25%

Note: Rates change frequently. Check municipal corporation website for current rates.

How to Calculate Your Property Tax:

Step 1: Visit Municipal Corporation Website

Examples:

• Mumbai: https://portal.mcgm.gov.in

• Delhi: https://mcdonline.nic.in

• Bangalore: https://bbmp.gov.in

• Chennai: https://www.chennaicorporation.gov.in

Step 2: Find Property Tax Calculator

Most corporations provide online calculators

Step 3: Enter Details

• Property ID/Assessment number

• Address

• Area (sq ft)

• Property type

• Usage

Step 4: Calculate System shows tax amount

When to Pay Property Tax:

Payment frequency varies:

Annual: Pay once a year

• Most municipalities

• Usually April-March financial year

Half-yearly: Two installments

• Chennai, some cities

• April-September, October-March

Quarterly: Four installments

• Rare

Due dates:

• Usually June 30 (for annual)

• Extended sometimes

Late payment: Penalty/interest charged

How to Pay Property Tax:

Method 1: Online Payment (Easiest)

Steps:

1. Visit municipal corporation website

2. Go to Property Tax section

3. Enter Property ID or search by address

4. View demand/bill

5. Pay via net banking/credit card/debit card/UPI

6. Get receipt

Advantages:

• Convenient

• Instant receipt

• No queues

• Available 24/7

Method 2: Offline Payment

At Municipal Office:

• Visit ward office

• Get bill

• Pay cash/cheque/DD

• Get receipt

At Authorized Banks:

• Some banks authorized to collect

• Present bill

• Pay

• Get receipt

Property Tax Exemptions:

Full exemption:

✓ Government buildings✓ Religious places (temples, mosques, churches, gurudwaras)✓ Charitable institutions (registered)✓ Educational institutions (non-profit)✓ Public utilities (water works, crematoriums)✓ War widows (in some states)✓ Disabled persons (in some states)

Partial exemption/Rebate:

✓ Senior citizens – 30-50% rebate (in some cities)✓ Women owners – 5-10% rebate (in some cities)✓ Early payment – 5-20% discount if paid early✓ Rainwater harvesting – Rebate in some cities✓ Solar panels – Rebate in some cities✓ Composting – Rebate in some cities

Check your municipality for specific exemptions!

Penalties for Non-Payment:

Late payment penalties:

• Interest: 1-2% per month on unpaid amount

• Penalty: 5-10% of tax amount

• Compounding: Interest on interest

Example:

• Tax due: ₹10,000

• 6 months late

• Interest @1.5% pm = ₹900

• Penalty: ₹500

• Total: ₹11,400

Long-term non-payment:

❌ Water connection cut (in some cities)❌ Property attachment – Municipality can seize property❌ Auction – Property sold to recover dues❌ Legal notice – Court proceedings❌ Difficulty selling – Buyers check tax clearance

Property tax clearance certificate needed for:

• Selling property

• Getting loans

• Mutations

• Some legal transactions

How to Check Property Tax Dues:

Online:

1. Visit municipal website

2. Enter Property ID or address

3. View outstanding dues

Offline:

• Visit ward office

• Provide address/property ID

• Get statement

SMS/Mobile App: Some cities offer SMS/app-based checking

How to Get Property Tax Receipt:

Online:

• Download from website after payment

• PDF receipt

Offline:

• Collect from ward office

• Or get via post

Keep receipts safe! Needed for:

• Tax filing (deduction under 80C)

• Selling property

• Proof of payment

Property Tax and Income Tax:

Can you claim deduction?

Under Section 24(b) Income Tax Act:

• Property tax paid can be deducted

• From "Income from House Property"

• Reduces taxable rental income

Benefit: Lower income tax

Example:

• Rental income: ₹5 lakh/year

• Property tax paid: ₹50,000

• Taxable income = ₹5,00,000 - ₹50,000 = ₹4,50,000

Keep property tax receipts for IT return filing!

Transfer of Property – Tax Clearance:

When selling property:

Buyer demands: No Dues Certificate (NDC) / Tax Clearance Certificate

Shows: All property taxes paid till date

How to get:

1. Pay all dues

2. Apply for NDC

3. Ward office issues certificate

Without NDC:

• Buyer may refuse

• Or deduct estimated dues from sale price

Disputes and Appeals:

If you disagree with tax assessed:

Step 1: Approach Assessing Officer

• Explain issue

• Provide documents

• Request revision

Step 2: File Appeal

• To Appellate Authority

• Within 30-60 days

• With evidence

Step 3: Further Appeal

• To Municipal Commissioner

• Then to Court (if needed)

Common disputes:

• Wrong property area calculation

• Wrong classification (commercial vs residential)

• Wrong valuation

• Not considering exemptions

Online Property Tax Portals (Major Cities):

Mumbai: https://portal.mcgm.gov.in

Delhi: https://mcdonline.nic.in

Bangalore: https://bbmp.gov.in

Chennai: https://www.chennaicorporation.gov.in

Hyderabad: https://www.ghmc.gov.in

Pune: https://ptax.punecorporation.org

Kolkata: https://www.kmcgov.in

Ahmedabad: https://ahmedabadcity.gov.in

Surat: https://www.suratmunicipal.gov.in

Jaipur: http://www.mcjaipur.org

Tips to Reduce Property Tax:

✓ Claim all exemptions (senior citizen, women, early payment)✓ Install rainwater harvesting (rebate in many cities)✓ Solar panels (rebate in some cities)✓ Pay early (5-20% discount common)✓ Check assessment – Ensure area calculated correctly✓ Verify classification – Some properties wrongly marked commercial✓ Challenge unfair assessment – Appeal if too high✓ Self-occupied vs rented – Some cities charge less for self-occupied

Property Tax vs Other Charges:

Property tax is different from:

Tax/Charge	Purpose	Paid to	Frequency
Property Tax	Municipal services	Municipality	Annual
Stamp Duty	Property registration	State Govt	One-time (at purchase)
Maintenance	Society upkeep	Housing Society	Monthly
Water Charges	Water supply	Municipality	Quarterly/Annual
Service Tax/GST	On maintenance (in some cases)	Govt	As applicable

Vacant Land Tax:

Some municipalities charge tax on vacant land:

• Usually lower than built property

• Encourages development

• Varies by city

Check: Whether your municipality taxes vacant land

Common Questions:

Q1: Tenant or owner pays property tax? A: Owner (unless rental agreement says otherwise)

Q2: Can I deduct property tax from rent? A: Some landlords do, but legally owner's responsibility

Q3: Bought new flat, previous owner didn't pay tax. Am I liable? A: Yes, tax is on property, not person. New owner liable.

Q4: Property in joint names. Who pays? A: All co-owners jointly and severally liable

Q5: How often does tax amount change? A: Municipalities revise rates periodically (every few years)

Real Examples:

Case 1: Sharma owns 1200 sq ft flat in Delhi. Using UAS method: 1200 sq ft × ₹8/sq ft = ₹9,600/year. Paid online in May (early), got 10% discount. Paid ₹8,640.

Case 2: Patel owns shop in Mumbai. ARV ₹10 lakh/year. Tax @20% = ₹2 lakh/year. Didn't pay for 3 years. Dues accumulated to ₹6.5 lakh with interest/penalty. Had to pay before selling property.

Case 3: Rao, senior citizen in Bangalore. Property tax ₹25,000. Got 30% senior citizen rebate + 15% early payment discount. Final payment: ₹25,000 × 0.7 × 0.85 = ₹14,875. Saved ₹10,125!

Conclusion:

Property tax is unavoidable but manageable. Know your liability, pay on time, claim exemptions, and avoid penalties.

Key points:

• Calculate correctly

• Pay before due date

• Claim all rebates

• Keep receipts

• Get clearance before selling

Own property? Check your property tax dues today and pay on time!