# Treatment of Municipal (Property) Taxes
Municipal taxes are reduced from GAV to arrive at NAV — but only when all conditions are met.
## Conditions for Deduction
| Condition | Requirement |
|---|---|
| Who paid? | Owner only (NOT tenant) |
| When paid? | Actually paid during the PY |
| Basis | Paid basis only — NOT due/accrual basis |
## Special Situations
- Tenant pays the municipal tax → No deduction to owner.
- Owner pays arrears of past years during current PY → Allowed in the year of payment.
- Owner pays advance for future years during current PY → Allowed in the year of payment.
- Both arrears + current + advance can be deducted in the year of actual payment.
## Property Situated Outside India
- Municipal/property tax levied by the foreign country is deductible, provided paid by the owner.
## Not Allowed For
- Self-Occupied Property (SOP) — Since GAV is NIL, no question of reducing municipal tax.