In a new building's WhatsApp group, property tax tends to arrive all at once: someone posts a photo of a bill, someone else says theirs is zero, and a third asks whether the builder has paid it. The property tax new flat owners pay is set by the municipal corporation, not by the builder or the society, and Mumbai, Pune and Thane do not agree on what they are taxing. Mumbai taxes what a flat is worth. Pune and Thane tax the rent it could fetch, whether or not anyone pays it.
Key takeaways
- Mumbai has levied property tax on capital value since 1 April 2010: the ready reckoner value of the property times its carpet area, adjusted by weights for the type of building, its use, its age and its floor.
- Pune and Thane levy it on rateable value, worked out from the rent the property could fetch in a year, which is estimated even for a home its owner lives in.
- Residential homes in Mumbai with 46.45 sq m (500 sq ft) of carpet area or less pay no property tax: a 2019 ordinance exempted them, and a 2022 amendment removed the cesses on the same homes from 1 January 2022.
- Pune's 40 percent concession for self-occupied homes, withdrawn in 2019 and restored in April 2023, has to be claimed: a property assessed since 2019 needs a PT-3 application with two proofs of residence.
- Until physical possession passes, municipal taxes are among the outgoings the promoter pays; after that your share comes through the possession deposits, and later as a line on the society's maintenance bill.
Neha's first property tax question
Neha (illustrative, as our stories always are) is 34, a marketing manager, and the owner-to-be of a 2BHK of about Rs 1 crore in a Mulund redevelopment project, bought with a Rs 60 lakh home loan after the checks in buying in a society redevelopment. The project ran late enough that she has already taken a delay claim to MahaRERA, the route weighed in RERA or the consumer commission. Now the keys are in sight, and a member of the old society, already rehoused in the new rehab building, has told her his flat pays no property tax at all.
Her questions: when does the first bill come, and in whose name? Does Mumbai's 500 sq ft waiver cover her flat, whose carpet area her agreement records as about 640 sq ft? And what will she pay until a bill exists? Names and numbers in this story are illustrative.
What property tax is, and two ways to set it
Property tax is the annual levy a municipal corporation charges on buildings and land within its limits. Every corporation multiplies a value by a rate. They differ on the value.
Capital value, in Mumbai. Since 1 April 2010 Mumbai has taxed property on its capital value: the market value from the state's ready reckoner, the rate also used for stamp duty and explained in ready reckoner rates, multiplied by the carpet area and by weights for the nature and type of building, its user category, its age and its floor. The tax is that capital value times the corporation's rate. The area is carpet area, not a brochure's built-up or super built-up figure, a difference set out in carpet area against built-up.
Rateable value, in Pune and Thane. These corporations start from the rent a property could fetch in a year, its annual letting value, and tax a rateable value worked out from it after an allowance. The rent is estimated even when the owner lives in the flat. Thane's estimate draws on the type of building and its use, its age, the number of floors and the built-up area.
An analogy: the valuer and the rental broker. Ask a valuer what a flat is worth and you get a price, adjusted for the building, its age and its floor. Ask a rental broker and you get a monthly rent. Mumbai asks the valuer's question. Pune and Thane ask the broker's, even about a flat its owner lives in, because the tax is on the rent the flat could fetch, not on rent anyone receives.
How the three corporations work out the bill
| Mumbai (BMC) | Pune (PMC) | Thane (TMC) | |
|---|---|---|---|
| What is taxed | Capital value | Rateable value, from the annual rent the property could fetch | Rateable value, from the annual rent the property could fetch, estimated even for a home its owner lives in |
| What sets your flat's figure | Ready reckoner value and carpet area, with weights for building type, use, age and floor | The rent estimate, less an allowance put back to 15 percent in April 2023 from 10 percent | Building type and use, age, number of floors and built-up area |
| The rule a new owner most needs | Homes of 46.45 sq m (500 sq ft) of carpet area or less pay no property tax | The 40 percent concession for a self-occupied home is claimed on form PT-3 for a property assessed since 2019 | Rates for homes are set to rise 12 percent under a decision of 17 August 2026 |
| Recent change | Capital values revised for 2025-26, the first revision since 2015 | Concession and allowance restored in April 2023 | The August 2026 rise, the first revision since 2018-19 |
Mumbai. Section 154 of the Mumbai Municipal Corporation Act requires capital values to be revised every five years. The 2020 revision was deferred because of the COVID-19 pandemic, so the 2015 values stood until 2025-26, when they moved with the ready reckoner the state revised on 31 March 2025; the corporation said in May 2025 that its tax rates were unchanged and the higher bills came from the new values. Because the age weight falls as a building gets older, a new flat can pay more than an older one of the same size next door.
Residential homes with 46.45 sq m (500 sq ft) of carpet area or less pay no property tax. A 2019 ordinance exempted them, and a 2022 amendment of three laws, the Mumbai Municipal Corporation Act, 1888, the state's education and employment guarantee cess law and its tree law, removed the cesses on the same homes from 1 January 2022.
Pune. For decades the corporation took 40 percent off the taxable value of a home its owner lived in, a concession dating from 1970. It withdrew the concession in 2019 after the state's audit objected, and the state government allowed it to continue in April 2023. For a new flat it is not automatic: a property assessed since 2019 must claim it on form PT-3 at the regional ward office, with two documents proving that the owner lives there.
Thane. The corporation's general body approved on 17 August 2026 a 12 percent rise in property tax for homes and 20 percent for commercial property, the first revision since 2018-19. If your first bill arrives after that, check which billing period the new rate starts from.
When the first bill arrives, and in whose name
Before possession, the tax is the promoter's. Municipal taxes are among the outgoings the promoter must pay until it hands over physical possession, under section 11(4)(g) of the RERA Act, and consumer commissions have held, in rulings reported by Moneylife, that a buyer is not liable for the tax before the occupancy certificate.
At possession, your share goes through the promoter. Maharashtra's model agreement lists a deposit for your proportionate share of taxes among the amounts collected at possession, and the possession demand letter tests each of those lines. The real cost of buying a flat counts property tax among the costs no agreement lists, because the corporation's figure exists only once it has assessed the new building, flat by flat.
After the society takes over, it is a line on the society's bill. Your share then arrives inside the maintenance bill, and it should follow your own flat's assessment rather than an average, as maintenance charges explains; from possession to society walks through that first year.
The clock starts with the occupancy certificate. ReraGenie's free page for every MahaRERA project shows whether its occupancy certificate slot holds a document and when it was uploaded (an upload, not proof the certificate was granted), and the Rs 299 project watch emails you when that project's filing changes. Find your project.
Ask the promoter in writing from what date the share of taxes in your possession demand runs, and keep the reply with your possession letter. Months before physical possession were the promoter's to pay, and a dated reply settles that before the corporation's first bill arrives.
The numbers behind the rules
Source: State government announcement of 1 January 2022, as reported by Deccan Herald
Concessions on this scale move real money. When Pune withdrew its 40 percent concession in 2019, 4,64,222 residential properties lost it, newly bought flats among them, as reported by Housing.com. Thane collected a record Rs 878 crore in property tax in 2025-26, as reported by Navbharat Live, before its August 2026 rise.
Where new owners get it wrong
Reading the 500 sq ft line off the brochure. Mumbai's test is carpet area, 46.45 sq m. In a redevelopment a rehab flat under the line pays nothing, while a larger sale flat in the same society pays on its full value.
Assuming Pune's 40 percent arrives by itself. A flat assessed since 2019 gets it only on a PT-3 application, and only while its owner lives in it.
Budgeting from a neighbour's bill. A new Mumbai building carries the highest age weight, and Thane's rates for homes are set to rise 12 percent, so an older flat's bill understates yours.
How Neha's questions were answered
The waiver did not reach her: about 640 sq ft of carpet area is well above the line, so her flat pays on its full capital value, while her rehoused neighbour's flat sits under it. His bill said nothing about hers.
The developer answered the rest in writing. Until it handed the new building to the society, the corporation's bill for it was the developer's. Her share would come through the tax line in her possession demand, which she asked to run from her possession date and no earlier, and after the handover the society's maintenance bill would carry her flat's own figure. When the corporation would assess the building, nobody could say; the start date of her own share was the one date she could fix.
What the report adds
For any covered Maharashtra project, the Rs 499 ReraGenie buyer report brings three things to these questions. The possession story sets the first promised date against the current one, and it is the current date your share of the outgoings waits on. The filed documents come as a ZIP, usually including the proforma agreement for sale filed at registration, so the possession and outgoings clauses can be read before the demand arrives. And the report states what the filings do not contain: MahaRERA files no per-flat carpet area, so it cannot place your flat on either side of Mumbai's 500 sq ft line; your registered agreement can. See what the report contains.
The one-line summary
Mumbai taxes a flat's capital value and spares homes of 500 sq ft of carpet area or less; Pune and Thane tax the rent a flat could fetch, with Pune's 40 percent to be claimed on PT-3; and until physical possession passes, the tax is the promoter's to pay.
Methodology and sources
- Mumbai: Maharashtra ordinances amending the Mumbai Municipal Corporation Act, and L.A. Bill No. 3 of 2022, published by PRS Legislative Research; Deccan Herald on the January 2022 announcement; the Bombay Chartered Accountants' Journal on the formula; the corporation's May 2025 statement on the revision, reported by PTI.
- Pune: the concession's withdrawal, restoration and form PT-3, as reported by Housing.com and Punekar News.
- Thane: published guides to TMC property tax; the Free Press Journal and other reports of the decision of 17 August 2026; Navbharat Live on the 2025-26 collection.
- Possession: section 11(4)(g) of the Real Estate (Regulation and Development) Act, 2016; consumer commission rulings as reported by Moneylife.
This article is educational and not tax advice. Check your own assessment with your municipal corporation's ward office.
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