Property Tax in India 2025-26 — Calculation, Payment & Income Tax Deduction | Taxclue

Property Tax in India — Calculation, Online Payment & Income Tax Deduction

Updated: 3 June 2026

Quick answer: Property tax (also called house tax or municipal tax) is an annual levy by local municipal corporations on immovable property. Rates are typically 0.5–2.5% of assessed value per year, varying by city and property type. Calculation is based on Annual Rental Value (ARV), Unit Area Value (UAV), or Capital Value System (CVS), depending on the municipality. It is paid online or at citizen service centres to bodies like NDMC, BMC, or BBMP. For let-out properties, property tax is fully deductible from rental income under Section 23 of the Income Tax Act — but only the amount actually paid during the year.

Sec 23 Property tax (municipal taxes) actually paid during the year is fully deductible from rental income — no cap — under Section 23 of the Income Tax Act.

Property Tax Online Payment Portals — Major Cities

All major municipal corporations offer online property tax payment. Keep the receipt/challan for income tax records and ownership proof.

City	Municipal Body	Online Portal	Payment Methods
Delhi	MCD (North/South/East)	mcdonline.nic.in	Net banking, UPI, debit/credit card
Mumbai	BMC (Brihanmumbai MC)	portal.mcgm.gov.in	Net banking, UPI, NEFT
Bangalore	BBMP	bbmp.gov.in / bbmptax.karnataka.gov.in	Net banking, UPI, debit card
Hyderabad	GHMC	ghmc.gov.in	Net banking, UPI, debit/credit card
Chennai	GCC (Greater Chennai Corp)	chennaicorporation.gov.in	Net banking, UPI, debit card
Pune	PMC	pmc.gov.in	Net banking, UPI, debit/credit card

Property Tax Computation Methods

Different cities use different methods to compute taxable value. Understanding your city's method helps you verify the tax demand and dispute errors.

Method	Cities Using It	How It Works	Tax Rate Range
Annual Rental Value (ARV)	Chennai, Hyderabad	Tax = % of the property's expected annual rental value (set by municipal body)	10–20% of ARV
Unit Area Value (UAV)	Delhi, Bangalore, Kolkata, Patna	Tax = Unit area value per sq ft × Built-up area × Usage/age/occupancy factors	Varies by zone; Delhi: 11–20% of annual value
Capital Value System (CVS)	Mumbai	Tax = % of the property's capital (market) value as published by municipal body	0.316–2.296% of capital value
Self-Assessment System (SAS)	Bangalore (BBMP), Pune	Owner calculates tax based on UAV and files self-declaration; BBMP verifies	0.5–2.5% depending on property type

Property Tax & Income Tax — Section 23 Deduction

For properties given on rent (let-out), income from house property is computed as:

Net Annual Value (NAV) = Gross Annual Value (GAV) − Municipal taxes paid

From NAV, a standard deduction of 30% is allowed under Section 24(a), and home loan interest under Section 24(b). The property tax deduction has no upper cap — the entire municipal tax paid during the year is deductible. Note: for self-occupied property, NAV = 0, so the property tax deduction does not apply.

Frequently Asked Questions

How is property tax calculated?

Property tax calculation depends on the method used by your municipality: (1) Annual Rental Value (ARV) — tax is a percentage of the property's annual rental value; (2) Unit Area Value (UAV) — tax = unit area value × built-up area × applicable rate; (3) Capital Value System (CVS) — tax is a percentage of the property's market value as notified by the municipality. Most Indian cities use ARV or UAV. Delhi uses UAV, Mumbai uses CVS, Bangalore uses UAV (SAS system).

Is property tax deductible in income tax?

Yes. Municipal taxes (property tax) actually paid during the year are fully deductible from the Gross Annual Value (GAV) of a let-out property under Section 23 of the Income Tax Act when computing income from house property. However, property tax is NOT deductible for self-occupied property (since the NAV is already taken as zero). The deduction is allowed only in the year the tax is actually paid, not when it accrues.

How to pay property tax online?

Visit your city's municipal corporation website (e.g., mcdonline.nic.in for Delhi, portal.mcgm.gov.in for Mumbai, bbmp.gov.in for Bangalore). Navigate to "Property Tax" or "Online Services". Enter your property ID/application number, verify the computed tax, and pay via net banking, UPI, debit/credit card, or NEFT. Download the challan/receipt after payment for records.

What are the exemptions from property tax?

Common property tax exemptions include: (1) Agricultural land used for farming; (2) Properties owned by religious/charitable institutions used solely for that purpose; (3) Properties of ex-servicemen (partial or full exemption in some states); (4) Properties below a threshold value (varies by city); (5) Buildings used as schools, hospitals in some municipalities. Exemption rules differ by state and municipality — always verify with your local body.

What if property tax is not paid on time?

Non-payment of property tax attracts penalties and interest (typically 1–2% per month on the outstanding amount). In severe cases, the municipal corporation can attach or auction the property to recover dues. Additionally, you cannot obtain a no-dues certificate (required for property sale/transfer, building plan approvals, or utility connections) until all dues are cleared. Timely payment also avoids legal proceedings under relevant municipal laws.

Property Tax Near You

Expert CA/CS assistance for property tax across India. Click your city for local details.

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