Property tax (house tax) is an annual levy by your municipal corporation on immovable property — typically 0.5%–2.5% of assessed value a year, computed by the ARV, UAV or CVS method depending on the city. Pay it online at your municipal portal and keep the receipt. For a let-out (or deemed let-out) property, the municipal tax you actually pay in the year is fully deductible from the Gross Annual Value under Section 23 before the 30% standard deduction. For a self-occupied home the Annual Value is nil, so property tax gives no income-tax benefit.
"Property tax" usually means the municipal / house tax paid to a local body (MCD, BMC, BBMP). That is separate from income tax on house-property income and capital gains tax on sale. This page covers the municipal levy and how paying it lowers your taxable rental income under the Income-tax Act.
Property Tax Online Payment — Major Cities
Every major municipal corporation lets you pay property tax online. Keep the challan/receipt — you need it as proof of payment to claim the Section 23 deduction and for any sale or transfer.
| City | Municipal Body | Online Portal | Payment Methods |
|---|---|---|---|
| Delhi | MCD | mcdonline.nic.in | Net banking, UPI, card |
| Mumbai | BMC (BrihanMumbai MC) | portal.mcgm.gov.in | Net banking, UPI, NEFT |
| Bangalore | BBMP | bbmptax.karnataka.gov.in | Net banking, UPI, card |
| Hyderabad | GHMC | ghmc.gov.in | Net banking, UPI, card |
| Chennai | GCC | chennaicorporation.gov.in | Net banking, UPI, card |
| Pune | PMC | pmc.gov.in | Net banking, UPI, card |
Portals and payment options are indicative; always confirm the current URL and your property ID with the municipal body.
How Property Tax Is Calculated
Cities use different bases to arrive at the taxable value. Knowing your city's method helps you check the demand and dispute errors.
| Method | Cities (examples) | How it works | Typical range |
|---|---|---|---|
| Annual Rental Value (ARV) | Chennai, Hyderabad | Tax = % of the property's expected annual rent set by the body | 10%–20% of ARV |
| Unit Area Value (UAV) | Delhi, Bengaluru, Kolkata, Patna | Unit value per sq ft × built-up area × use/age/occupancy factors | Varies by zone |
| Capital Value System (CVS) | Mumbai | Tax = % of the property's notified capital (market) value | ~0.3%–2.3% of capital value |
| Self-Assessment (SAS) | Bengaluru (BBMP), Pune | Owner computes on UAV and self-declares; body verifies | ~0.5%–2.5% by type |
Ranges are indicative and revised periodically by each municipal body. Rebates often apply for early or lump-sum payment.
- Usage matters — residential, commercial and vacant land are taxed at different rates.
- Rebates & penalties — many cities give an early-payment rebate and charge 1%–2% per month interest on arrears.
- Occupancy & age factors — self-occupied, tenanted and older buildings often carry different multipliers.
Own a let-out property? Get the rental income and deductions computed correctly.
Talk to a Tax Expert →Is Property Tax Deductible in Income Tax?
Yes — but only for a let-out or deemed let-out property, and only to the extent actually paid during the year. Income from house property is built up like this:
- Municipal tax (Section 23): the property tax you pay in the year is deducted from GAV to get the Net Annual Value — there is no upper cap.
- Standard deduction (Section 24(a)): a flat 30% of NAV, whatever your actual expenses.
- Interest (Section 24(b)): home-loan interest up to Rs 2,00,000 for a self-occupied house; fully deductible for a let-out property.
For a self-occupied property the Annual Value is taken as nil, so there is nothing to deduct the municipal tax from — paying property tax on your own home does not reduce your income tax. Only the home-loan interest (up to Rs 2 lakh) helps. The municipal-tax deduction applies to let-out / deemed let-out property.
Under the new tax regime (default from FY 2023-24) you can still deduct interest against a let-out property's income, but any resulting loss from house property cannot be set off against salary or other income, and interest on a self-occupied house is not allowed at all. The full Section 24(b) benefit on a self-occupied home survives only under the old regime.
Rental Income After Property Tax — Example
A flat let out for Rs 30,000/month (Rs 3,60,000 a year), with Rs 18,000 municipal tax paid and Rs 1,80,000 home-loan interest for the year. Here is the house-property computation.
Let-out property
Self-occupied home
So on the let-out flat, paying property tax cut the taxable base by the full Rs 18,000 before the 30% deduction. Use our income-tax calculator to see the tax on your total income, and read income from house property for the complete rules.
Property tax helps your tax if
- The property is let out or deemed let out
- You actually paid the municipal tax in the year
- You keep the challan / payment receipt as proof
It does NOT help if
- The house is self-occupied (Annual Value is nil)
- The tax was billed but not yet paid in the year
- You are on the new regime and it creates a set-off loss
- Municipal tax challan / online receipt
- Rent agreement & rent received proof
- Home-loan interest certificate
- Property ID / assessment number
- Old vs new regime chosen before filing
- ITR Schedule HP completed correctly
Want us to compute house-property income and file your ITR?
Get ITR Filing Help →Property Tax — Frequently Asked Questions
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Property Tax Paid — Now Claim It the Right Way
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