India has 3 property tax systems – Capital Value, Annual Rental Value (ARV), Unit Area Value.
1. Capital Value System
Used in: Mumbai, Pune, Nagpur, Nashik, Pimpri Chinchwad, Kolkata, Ahmedabad.
Formula: Ready Reckoner Rate x Area x Factors.
Example: Pune flat 1000 sqft RR 8000 = CV 80 lakh x 0.2% = Rs 16000 tax. Most transparent, linked to market value.
2. Annual Rental Value System
Used in: UP (Lucknow, Kanpur, Agra), Punjab, Chandigarh, Chennai (old).
Formula: Expected monthly rent x 12 – maintenance.
Example: Lucknow house rent Rs 15000/month = ARV 1.8L -10% =1.62L x 15% = Rs 24300. Based on notional rent, not actual.
3. Unit Area Value System
Used in: Delhi, Bengaluru, Hyderabad (partially), Gurugram.
Formula: Unit Rate per sqft per month x Area x Factors x 10 months.
Example: Delhi Cat D Rs 270 x 100 sqm = 27000 x 0.9 age =24300 AV x10% = Rs 2430. Simplest, zone based.
Which is Best?
Capital Value is most scientific and linked to market. ARV is old British system, being phased out. Unit Area is middle path.
Your City System List
Check our state hubs – Maharashtra: Capital Value, Karnataka: Unit Area, UP: ARV, Gujarat: Annual Rate, Delhi: Unit Area, Tamil Nadu: ARV.
FAQs
Q: Can I choose system? No, fixed by municipal act.
Q: Which cities changed system recently? Pune changed from ARV to Capital Value in 2010, Bengaluru to Unit Area in 2008.
Q: Does system affect tax amount? Yes, Capital Value generally higher in prime areas.