Property taxes in India: Full guide for Americans

If you own property in India, you'll need to pay property taxes regardless of whether you live there or not. This tax applies to all types of property, including residential homes and land. Property taxes in India fund local government services like road maintenance, water supply, and public infrastructure.

It can be a little confusing, but India doesn't have a single nationwide property tax rate. Instead, rates are different depending on your location and can range anywhere from 5% to 20% of your property's assessed value.¹ Here's everything else you need to know.

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What are property taxes in India?

Property taxes in India are yearly fees that local governments charge property owners. These taxes pay for public services like street lights, garbage collection, water supply, and road repairs. It's a pretty similar concept to property taxes in the US.

When you buy a property in India, how much you end up paying in taxes depends on where your property is located, its current value, and the rules set by your local government office. Tax rates usually range from 5% to 20% of your property's value, and cities may charge more than rural areas.¹

What types of property taxes are there in India?

All these categories face the same property tax system, but the amount you pay changes based on the type and value of what you own. For most American property owners in India, land and improvements made to land are the main tax categories you'll deal with.

How are property taxes calculated in India?

How you calculate your property tax in India depends on your location, but the general formula is:¹

Local authorities will assess your property, looking at a few different things, such as:

• Location
• Whether you live at the property yourself or rent it out to others
• Property type
• Amenities, such as parking spaces or elevators
• Age of your property
• Construction type
• Size

Generally speaking, local governments use one of the following 3 methods to calculate property tax in India:

• Capital Value System (CVS): Your tax equals a percentage of your property's current market value
• Unit Area Value System (UAS): Authorities first set a value per square foot based on your location and land prices, then they multiply this by your property's total built-up area
• Annual Rental Value System (RVS): Your tax is based on how much rent your property could earn each year, considering factors like location, size, condition, and nearby amenities

For example, Mumbai uses the Capital Value System. At the same time, Delhi, Kolkata, Pune, and Bengaluru use the Unit Area Value System. Chennai and parts of Hyderabad follow the Annual Rental Value System.

These calculations can be confusing, but you can usually calculate your property tax amount online through your local municipal corporation's website.

How to pay property taxes in India?

You can pay your property taxes in India either online or in person. For in-person payments, visit your local municipal office and pay at the designated property tax counter. You'll receive a receipt after payment for your records.

Many (but not all) municipal authorities now offer online payment options, which can make the process easier. To pay your property taxes online, you'll need to:

Step 1 – Go to your city's municipal corporation website
Step 2 – Look for the property tax section and click on the payment option
Step 3 – Select the right application form for your property type
Step 4 – Fill in your property details, like location and property type
Step 5 – Choose the assessment year you're paying for (you can also pay previous years if you owe back taxes)
Step 6 – Enter additional details like your plot number and property identification number
Step 7 – Choose how you want to pay, such as by credit card, debit card, or online banking

That said, these steps can look different depending on the municipality your property is located in. This is the general process you can expect, but you can get in touch with your local authorities for more exact steps.

Are there any property tax exemptions in India?

Yes, you might qualify for property tax exemptions based on factors like:

• Your age (senior citizens often get discounts)
• Your income level
• Type of property you own
• Where your property is located
• History of public service

There's also an income-based exemption. If your property is worth less than 250,000 INR and you earn rental income from it, you may not have to pay property tax at all.¹

However, if rental income is your main source of earnings, you might still owe taxes.

Check with your local municipal office to see which exemptions apply to your situation, as rules vary by city and state.

Penalties for not complying with property tax rules in India

If you don't pay your property taxes on time, you'll face penalty charges that vary by state. The longer you wait, the more these penalties can add up.

In serious cases where you ignore official notices to pay, the consequences can be very serious. Local authorities may take legal action against you, which could include imprisonment and other strict government measures.

Frequently asked questions

What is the property tax rate in India?

It depends on where your property is located, with rates typically ranging from 5% to 20% of your property's assessed value.¹

When should I pay property tax in India?

Most areas allow you to pay either once a year (annually) or twice a year (semi-annually).² Check with your local tax office for due dates that apply to your property to avoid penalties.

Do I have to pay property tax in India as a US citizen?

Yes, US citizens who own property in India must pay property taxes regardless of where they live. If you own property in India, you're subject to Indian property tax laws.

If you earn any income from your property, such as rental earnings or capital gains when you sell it, you will also have to report this income on your US tax return. However, because of the tax treaty between the US and India, you'll likely only pay taxes on this income once.³

If you're thinking of buying property or even moving to India as an expat, it's important to understand your property tax responsibilities. However, moving money between the US and India can be expensive if you use banks, which often charge high transfer fees and poor exchange rates.

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Sources

1. Bank Bazaar - How to Calculate Property Tax Online in India
2. Groww - Property Tax - Types, Calculation, & Payment
3. IRS - Tax Convention with the Republic of India

Sources checked 09/19/2025