# Municipal Tax (Deduction from GAV → NAV)
Municipal Tax is the only deduction allowed from Gross Annual Value (GAV) to arrive at Net Annual Value (NAV).
## What qualifies as Municipal Tax
Any tax paid to the Municipality or Local Authority, including:
- Water tax
- Local tax
- Property tax
- Corporation tax
- Sewerage tax
## Four Strict Conditions for Deduction
1. Payment basis only — Deduction is allowed only in the year of actual payment. It is NOT allowed on a due/accrual basis. Even arrears (past years' tax) paid during the current PY are deductible.
2. Paid by the owner — Only if the owner/landlord pays. If the tenant pays municipal tax, the owner gets NO deduction.
3. In respect of let-out / deemed let-out property — Self-occupied property has NAV = Nil; municipal tax is not deductible because NAV is already zero.
4. Conversion when given in % — If municipal tax is expressed as a percentage (e.g., 10% of municipal value), apply that % on Municipal Value to compute the rupee amount.
## NAV Formula
```
NAV = GAV – Municipal Tax (paid by owner during the PY)
```