How Property Tax Is Calculated in India: ARV, Unit Area and Capital Value Methods
Indian cities calculate property tax in one of three ways. The annual rental value method taxes what the property could earn in rent; the unit area method multiplies a fixed rate per square metre or foot by the area and a set of factors; the capital value method taxes a percentage of market value. Delhi, Bengaluru and Kolkata use unit area, Mumbai uses capital value, and Chennai and Hyderabad use rental value.
Key takeaways
- Every method multiplies a base value by your area and by factors for age, use and occupancy, then applies a rate.
- Delhi's MCD taxes a new, self-occupied 100 sq m flat in a category A colony at about Rs 7,560 a year before rebates, and the same flat in category H at about Rs 700.
- Mumbai has exempted residential homes of up to 500 sq ft carpet area from property tax since 1 January 2022.
- Early-payment rebates range from 5% (Bengaluru, Kolkata) to 10% (Delhi, and Pune for smaller properties), and Pune gives self-occupied homes a 40% rebate.
- Unpaid property tax is a first charge on the property, so a buyer inherits arrears: check dues before registration.
The three methods in one table
| City | Method | Base value | Residential rate | Early-payment rebate | Notable concession |
|---|---|---|---|---|---|
| Delhi (MCD) | Unit area | Rs 100 to Rs 630 per sq m a year, colony category H to A | 7% to 12% of annual value | 10% on a lump sum by the notified date (some guides say 15%) | 30% for seniors, women and some others on one home, up to 200 sq m |
| Mumbai (BMC) | Capital value | Ready reckoner rate × built-up area × factors | Sources quote about 0.3% to 0.8% of capital value, all components | Varies | Homes up to 500 sq ft carpet exempt since 2022 |
| Bengaluru (GBA, formerly BBMP) | Unit area | Rs 0.80 to Rs 2.50 per sq ft a month, zones F to A, self-occupied | 20% of net annual value, plus 24% cess | 5% by 31 May | Depreciation for older buildings |
| Chennai (GCC) | Annual rental value | Basic street rate per sq ft × plinth area | Billed half-yearly | Early-payment incentive | 2022 revision |
| Hyderabad (GHMC) | Annual rental value | Monthly rental value per sq ft × plinth area × 12 | 17% to 30% slabs, plus 8% library cess | Check the GHMC portal | Depreciation allowance |
| Pune (PMC) | Rateable value | Rental value, less allowances | General tax plus components | 10% or 5% by 31 May | 40% rebate for self-occupied homes |
| Kolkata (KMC) | Unit area, since April 2017 | Base unit area value by block category A to G | 6% to 20%; 20% for an ordinary multi-storey flat | 5% of quarterly tax | 293 blocks |
Delhi: the unit area system
The MCD sorts colonies into eight categories, A to H, each with a unit area value per sq m per year:
Annual value = unit area value × covered area × age factor × use factor × structure factor × occupancy factor. Property tax is the annual value multiplied by the category's rate.
Published values include Rs 630 per sq m for category A, Rs 500 for B, Rs 400 for C and Rs 100 for H. Residential rates are 12% in categories A and B, 11% in C and 7% in H. The age factor runs from 0.5 for the oldest buildings to 1 for the newest, and let-out or commercial property carries higher factors than a self-occupied home. The same categories drive circle rates in Delhi.
Worked bill: a 100 sq m flat
- Category A, new, self-occupied, RCC: 630 × 100 × 1 × 1 × 1 × 1 = Rs 63,000 annual value. Tax at 12% = Rs 7,560.
- Category C, same flat: 400 × 100 = Rs 40,000. Tax at 11% = Rs 4,400. Paid in a lump sum with a 10% rebate, Rs 3,960.
- Category H, same flat: 100 × 100 = Rs 10,000. Tax at 7% = Rs 700.
Sources disagree on the lump-sum rebate: guides for 2026-27 give 10%, with the date extended to 31 July 2026, while older ones say 15%.
Mumbai: the capital value system
Capital value is the ready reckoner rate multiplied by built-up area and by factors for building type (1 for RCC, 0.6 for chawls), use (3 for shops and offices), age (0.8 before 1945, 0.9 for 1945-85, 1 after) and floor. How the ready reckoner is set is explained in what the guideline value or ready reckoner rate is.
The bill bundles general tax, water and sewerage taxes, education cess and other components. Published combined residential rates disagree: current slab tables run from about 0.316% to 0.771%. On a capital value of Rs 1.5 crore, that is Rs 47,400 to Rs 1,15,650 a year, so read the last bill rather than estimate.
Two points are settled. Homes of 500 sq ft carpet area or less have been exempt from property tax since 1 January 2022. A 60% concession for 500-700 sq ft homes has been approved by the civic house and sent to the state; treat it as pending until your bill shows it.
Bengaluru: UAV with a 20% rate and a cess
The Greater Bengaluru Authority, which replaced the BBMP, kept the unit area value system and six value zones, A to F. For self-occupied homes, published rates run from Rs 2.50 per sq ft per month in zone A and Rs 2.00 in zone B down to Rs 0.80 in the outer zones.
The formula: gross value G = built-up area × UAV × 10 months. Subtract depreciation for older buildings. Tax = net value × 20%, then add a cess of 24% of the tax.
Worked bill: a 1,200 sq ft flat in zone B
- G = 1,200 × Rs 2.00 × 10 = Rs 24,000. New building, so no depreciation.
- Tax = Rs 24,000 × 20% = Rs 4,800. Cess = Rs 4,800 × 24% = Rs 1,152.
- Total Rs 5,952. Paid in full by 31 May for the 5% rebate: about Rs 5,654.
Check the A khata vs B khata status before buying too.
Chennai, Hyderabad, Pune and Kolkata
Chennai
The Greater Chennai Corporation fixes a monthly rental value from the basic street rate per sq ft, the plinth area and the use, then taxes the annual figure in two half-yearly bills, due by 30 September and 31 March. The April 2022 revision, the first in about 24 years, raised residential tax by 50% for homes under 600 sq ft in the old city (25% in added areas), rising in bands to 150% for homes over 1,800 sq ft (100% in added areas).
Hyderabad
GHMC multiplies plinth area by a monthly rental value per sq ft and by 12, applies a 17% to 30% slab, allows depreciation, and adds an 8% library cess. Rental values vary by locality; read them from an existing assessment.
Pune
Pune's feature is the 40% rebate for self-occupied homes, withdrawn in 2019 and restored after the state legislature acted in August 2023. Owners registered in the gap years had to file form PT-3 to claim it. Paying the full year by 31 May earns 10% off general tax where rateable value is up to Rs 25,000, and 5% above.
Kolkata
Since April 2017 the KMC has used unit area assessment. Its 141 wards are split into 293 blocks, each in a category from A to G with its own base unit area value. The statutory rate band is 6% to 20%, with an ordinary multi-storey residential property at 20% of annual value, and a 5% rebate on quarterly tax paid in time.
Arrears, first charges and the buyer's dues check
Section 123 of the Delhi Municipal Corporation Act, 1957 makes property tax a first charge on the premises, and Mumbai's law is similar. The corporation looks to whoever owns the property now, so a seller's five unpaid years can land on you after registration. A second trap: Delhi taxes covered area, Mumbai's exemption uses carpet area, Chennai and Hyderabad use plinth area; mixing them up produces wrong estimates.
So before you sign:
- Ask for the last few years' receipts, match the property ID to the sale deed, and check dues on the portal yourself.
- Where a no-dues certificate is available, get it; otherwise write an indemnity and a holdback into the agreement.
- After registration, apply for mutation.
Other cities have their own rules and portals, covered in paying property tax in Gurgaon and property tax in Noida. For contrast, Dubai levies no annual property tax of this kind on homes, as property tax in Dubai explains.
Frequently asked questions
How is property tax calculated for a flat in Delhi?
The MCD multiplies the unit area value for your colony category by the covered area, then by factors for age, use, structure and occupancy, to get the annual value. Tax is a percentage of that: 12% in categories A and B, 11% in C, and 7% in H. A new 100 sq m self-occupied flat in category A pays about Rs 7,560 before rebates.
Is a small flat in Mumbai exempt from property tax?
Yes, if the carpet area is 500 sq ft or less and the home is residential. The BMC has exempted such homes since 1 January 2022. A 60% concession for homes of 500 to 700 sq ft was approved by the civic body and sent to the state government, so check your bill before assuming it applies to you.
Which Indian cities give a rebate for paying property tax early?
Most large corporations do. Delhi gives 10% on a lump sum paid by the notified date, though some guides still quote 15%. Pune gives 10% or 5% on general tax paid by 31 May, depending on rateable value. Bengaluru gives 5% for full payment by 31 May, and Kolkata 5% of the quarterly tax paid in time.
Do I have to pay the previous owner's unpaid property tax?
Very likely. Delhi's municipal law makes property tax a first charge on the premises, and other cities have similar rules, so the corporation can recover arrears from the current owner. Check the dues on the portal, ask for receipts, and hold back part of the price or take a written indemnity until the seller clears them.
Why is my property tax different from my neighbour's for the same size flat?
Usually because one of the factors differs. A let-out flat carries a higher occupancy factor than a self-occupied one, an older building a lower age factor, and a flat claimed under a concession for seniors or women a lower bill. In Pune, a missing self-occupied rebate is a frequent cause. Compare the assessment details on both bills.
If you are weighing the running costs of a flat before you buy, Realty Hunting can help you check the numbers.
