Property Tax Update: Rates, Deadlines and New Rules

 

Property Tax Update: Rates, Deadlines and New Rules

The Municipal Corporation of Delhi (MCD) and several other major urban local bodies (ULBs) across India have implemented significant changes to property tax regimes effective from the financial year 2026–27. These revisions—announced in late December 2025 and further clarified through January 2026 circulars—aim to widen the tax base, improve collection efficiency, introduce digital-first compliance, and align property tax revenue with rising urban infrastructure costs. In Delhi alone, the MCD expects an additional ₹1,800–2,200 crore in annual revenue once the new system is fully rolled out. Similar reforms have been notified in Mumbai (BMC), Bengaluru (BBMP), Hyderabad (GHMC), Chennai (GCC) and Pune (PMC), with varying degrees of convergence toward a unit-area or capital-value-based system.

This article explains the key changes in rates, deadlines, new rules, exemptions, penalties and the likely impact on homeowners, tenants and investors in 2026.

Delhi – MCD Property Tax 2026–27: Key Changes

The MCD has moved to a hybrid Unit Area System (UAS) + Self-Assessment model from the earlier purely area-based system. The most important changes are:

• Base Unit Area Values (UAV) revised upward by 18–42% depending on the category of colony (A to H). Highest increase in A & B categories (South and New Delhi), lowest in G & H (unauthorised/urban villages).
• Age factor now gives higher rebate: buildings older than 25 years get 25% rebate (earlier 20%); older than 40 years get 40% rebate.
• Vacancy rebate reduced from 10% to 5% and made applicable only if property is vacant for ≥6 months in a year.
• Occupancy factor introduced: self-occupied residential = 1.0; rented residential = 1.2; commercial = 1.5–2.0 (highest for malls, hotels, banks).
• Green building rebate enhanced to 15% (from 10%) for GRIHA 4-star and above certified properties.
• Online self-assessment mandatory for all properties above 100 sq m from FY 2026–27; properties below 100 sq m can still use the old system till March 2027.

New tax rates (per sq m per annum – residential self-occupied)

• A-category colonies (e.g., Vasant Vihar, Jor Bagh): ₹18–₹22
• B-category (Greater Kailash, Defence Colony): ₹14–₹17
• C-category (Rohini, Mayur Vihar): ₹9–₹12
• D & E (Dwarka, Pitampura): ₹6–₹9
• F, G, H (unauthorised, resettlement): ₹2.5–₹5.5

Deadline

• First instalment (50% of annual tax): 30 June 2026 (no rebate)
• Second instalment: 30 September 2026 (5% rebate if paid by 30 June)
• Last date without penalty: 31 March 2027
• Rebate for advance full-year payment: 8% if paid by 30 April 2026

Penalty for delay

• 1% per month simple interest on unpaid amount (maximum 12% per annum).

Mumbai – BMC Property Tax Changes for 2026–27

Brihanmumbai Municipal Corporation (BMC) has retained the capital value (CV) system introduced in 2010 but made annual CV revision mandatory from 2026–27 (earlier it was discretionary). Average CV increase is 22% across the city, with higher jumps in South Mumbai (Fort, Marine Drive, Cuffe Parade – up 35–48%) and lower in suburbs (Mulund, Borivali – up 12–18%).

Key changes:

• Ready reckoner rates used for CV calculation revised upward by 20–45% in different zones.
• 10% additional tax on vacant land and non-residential properties kept unused for >1 year.
• 15% rebate for properties with rainwater harvesting + solar rooftop (minimum 1 kW).
• Online payment mandatory for properties above ₹50,000 annual tax.

Deadline: 30 June 2026 for 8% rebate; 30 September 2026 for 4% rebate; penalty 2% per month after 31 March 2027.

Bengaluru – BBMP Property Tax 2026–27

BBMP has increased the Guidance Value (GV)-linked tax by an average 20% and introduced a 10% annual escalation clause for the next 5 years. Residential properties in A & B zones (Indiranagar, Koramangala, Sadashivanagar) see 25–38% jump, while peripheral zones (Yelahanka, Devanahalli) see 10–15%.

New rules:

• 20% rebate for properties with solar PV ≥3 kW and rainwater harvesting.
• 5% rebate for women owners (single or joint).
• Mandatory linkage of property tax with Aadhaar and Khata certificate for new assessments.

Last date with 5% rebate: 30 April 2026; without rebate: 30 June 2026; penalty 2% per month thereafter.

Other Major Cities – Quick Snapshot

• Hyderabad (GHMC): 15% average increase; 100% exemption for properties up to 150 sq yd in old city areas if self-occupied.
• Chennai (GCC): Unit-area-value revision after 8 years; 18–30% increase in zones 1–8; 10% rebate for senior citizens.
• Pune (PMC): Capital value system with 12–28% hike; 15% rebate for rooftop solar ≥2 kW.

Impact on Homeowners, Investors and Renters

• Homeowners — Middle-class families in premium colonies face 20–40% tax increase (₹8,000–₹25,000 additional annual liability in Delhi/Mumbai). Many are opting for joint-name transfers to avail women/senior-citizen rebates.
• Investors — Rental yield compression (already 2–3% in metros) worsens by 0.3–0.6% due to higher holding costs. Capital values may correct 5–8% in over-supplied pockets if tenants resist rent hikes.
• Renters — Landlords in many cities are expected to pass on 40–60% of the tax increase via rent hikes, especially in commercial and premium residential segments.
• Builders — Pre-launch projects in new zones face higher upfront tax liability, potentially delaying launches or increasing pre-EMI burden on buyers.
• Overall city finances — MCD projects additional ₹1,800–2,200 crore; BMC expects ₹2,500–3,000 crore; BBMP targets ₹1,200 crore extra. These funds are earmarked for road repairs, water supply augmentation and waste management.

How to Check and Pay Property Tax Online (2026 Process)

Most ULBs have unified portals:

• Delhi → mcdonline.nic.in (use property ID or Aadhaar-linked search)
• Mumbai → portal.mcgm.gov.in
• Bengaluru → bbmp.gov.in → Property Tax → SAS
• Hyderabad → ghmc.gov.in
• Chennai → chennai corporation tax portal

Steps (common across cities):

1. Log in / Guest search with property ID / door number.
2. View current assessment and new tax liability.
3. Select instalment or full payment.
4. Pay via UPI, net banking, debit/credit card.
5. Download receipt and get 5–8% rebate if paid early.

Conclusion: A New Reality for Property Owners

The 2026 property tax revisions mark the end of an era of low or frozen municipal levies in many Indian cities. Higher taxes are now a structural reality driven by rising urban infrastructure costs, falling octroi/compensation grants and the need for local bodies to become financially self-reliant. While middle-class homeowners feel the pinch, the additional revenue—if used transparently—can improve civic services significantly.

For existing owners, the message is clear: pay early to avail rebates, explore legitimate exemptions (senior citizens, women, green buildings), and factor the higher liability into long-term financial planning. For prospective buyers, property tax should now be a serious line item in budget calculations, especially in premium and newly developed zones.

The era of cheap urban living is over; the era of accountable urban governance may finally be beginning.