Property Tax Overview in India

Property in India is taxed across several distinct layers: an annual charge collected by local municipal bodies, a one-time stamp duty and registration fee at the point of purchase, Goods and Services Tax (GST) on under-construction units, and a withholding requirement (TDS) when the sale price exceeds INR 50 lakh. There is no federal or national property tax. The old wealth tax, which previously captured high-value property above a net-wealth threshold, was abolished by the Finance Act 2015 effective from FY 2015-16 and has not been replaced with any equivalent levy.

How are annual municipal property taxes calculated?

Municipal bodies across India assess annual property tax using one of three principal valuation systems, and the applicable system depends entirely on which city the property sits in. Under the Annual Rental Value (ARV) system, used in cities such as Chennai (Greater Chennai Corporation) and Hyderabad (GHMC), the corporation estimates the gross annual rent the property could command on the open market and applies a percentage rate to that figure. Under the Capital Value System (CVS), used by Mumbai's Brihanmumbai Municipal Corporation (BMC/MCGM), tax is computed as a percentage of the property's market value benchmarked to the government-published Ready Reckoner rate; the BMC formula is: Capital Value = Base Ready Reckoner Rate x Carpet Area x Nature-of-Building Factor x Age Factor x Floor Factor x User Category Weightage. The BMC left its tax rate unchanged in 2025-26 but revised Ready Reckoner benchmarks by an average of 3.89%, producing higher bills without a formal rate change. Properties under 500 sq ft in Mumbai remain fully exempt. Under the Unit Area Value (UAV) system, used by Delhi (MCD) and Bangalore (BBMP/GBA), a per-square-metre or per-square-foot base rate is fixed for each geographic zone, then multiplied by covered area and adjustment factors for age, construction type, floor, and occupancy. Delhi MCD divides the city into eight property categories (A through H); unit area values range from approximately INR 100 per sq m for Category H to INR 630 per sq m for Category A, with residential tax rates running 7-12% on annual value and commercial at 20%. Bangalore BBMP divides the city into six zones (A-F) and applies the formula: Tax = (Gross Unit Area Value - Depreciation) x 20% plus a 24% cess on the resulting tax. Across all cities, common full exemptions apply to places of public worship, burial and cremation grounds, heritage buildings under government stewardship, and agricultural land with associated structures. Many municipalities also offer a 25-50% rebate for senior-citizen owner-occupiers, though the precise concession varies by local by-law.

What stamp duty and registration charges apply when buying property?

Stamp duty is a state-level charge on the conveyance deed registered at the time of purchase. Rates are levied on whichever is higher: the agreement value or the government-set Ready Reckoner (circle) rate, preventing under-declaration of purchase price. Registration charges are uniformly set at 1% of the assessed value across all Indian states, though most states cap the absolute rupee amount (Maharashtra caps at INR 30,000; Karnataka at INR 25,000; Tamil Nadu at INR 40,000; Delhi at INR 30,000). Most states offer a 1-3 percentage-point concession for female buyers, intended to encourage women's property ownership. The table below shows current rates for major states.

Note: Rates as reported by state government sources and verified property portals for 2025-26. Individual transaction values should be confirmed against the relevant Sub-Registrar's published schedule.

Does GST apply to property purchases?

GST applies only to under-construction residential properties -- units for which the developer has not yet received a completion certificate from the local authority. The current rate structure, in place since April 2019, distinguishes between affordable and non-affordable housing. Affordable housing -- defined as a unit with carpet area up to 60 sq m in a metropolitan area (or 90 sq m in a non-metro) priced at or below INR 45 lakh -- attracts GST at 1% without Input Tax Credit (ITC). All other residential under-construction projects attract GST at 5% without ITC. Because land is not a supply of goods or services under GST law, the government assumes 33% of the total agreement value represents land; GST is therefore applied only to the remaining 67% representing construction. Ready-to-move properties that carry a completion certificate are fully exempt from GST. No GST applies to the resale of completed properties between individual buyers and sellers.

What is Section 194-IA TDS on property transactions?

Section 194-IA of the Income Tax Act 1961 (effective 1 June 2013) requires any buyer purchasing immovable property -- other than agricultural land -- to deduct Tax Deducted at Source at 1% of the sale consideration or stamp duty value, whichever is higher, whenever that value meets or exceeds INR 50 lakh. The entire consideration is subject to deduction, not only the amount above the threshold. The obligation rests with the buyer, not the seller. The buyer files Form 26QB (the challan-cum-statement) on the Income Tax e-filing portal and deposits the deducted amount within 30 days from the end of the month in which TDS was deducted. Once deposited, the buyer may download Form 16B from the TRACES portal (typically available within 10-15 days of deposit) and is required to provide it to the seller. Both buyer and seller must quote their Permanent Account Number (PAN); where the seller's PAN is unavailable, the deduction rate rises to 20%. For transactions where the earlier of payment or credit falls on or after 1 April 2026, the corresponding provision is Section 393(1), Table Sl. No. 3(i), of the Income Tax Act 2025; the 1% rate is unchanged under the new legislation.

Was a national wealth tax ever charged on Indian property?

Yes. The Wealth Tax Act 1957 imposed an annual levy on net wealth above a threshold, and residential and commercial property formed a significant part of the taxable base. The Finance Act 2015, passed with effect from FY 2015-16 (assessment year 2016-17), abolished wealth tax in its entirety. Revenue from the tax in FY 2013-14 was approximately INR 1,008 crore -- a fraction of total tax collections -- and the administrative and compliance costs were disproportionate. The government replaced the lost revenue stream by raising the income-tax surcharge from 2% to 12% for individuals earning above INR 1 crore. No equivalent annual levy on property net worth has been introduced since.

The interplay of these four layers means a buyer of a new Mumbai flat priced at INR 1 crore would face roughly INR 6 lakh in stamp duty plus INR 30,000 (capped) in registration charges, 5% GST on 67% of the agreement value (approximately INR 3.35 lakh), and must withhold INR 1 lakh (1% TDS) from the payment to the developer, depositing that via Form 26QB within the prescribed window. Once the property is owned, annual BMC property tax -- typically a few thousand to tens of thousands of rupees per year depending on location and size -- becomes a recurring obligation. For the current financial year, consult the India country overview for general context on the broader Indian tax regime. Because the actual liability depends on property type, city, state, income bracket, and transaction structure, anyone facing a property purchase or disposal in India should seek guidance from a qualified tax professional who holds a current certificate of practice under the Institute of Chartered Accountants of India (ICAI) or is a registered Tax Return Preparer.