The small private plane hit an open area at a construction site for a multistory building in the Ghatkopar district, a crowded area with many residential apartments.
All four people on-board - a pilot, co-pilot and two aircraft maintenance engineers -died in the crash, along with two people on the ground. The 12-seat Beechcraft King Air C90 aircraft had been on a test flight with two pilots and two engineers on board, the Directorate General of Civil Aviation said in a statement.
It crashed after taking off from Mumbai's Juhu airstrip, which is used by small planes and is some distance from the city's main airport.
The cause of the crash is not yet known, but the pilot has been praised for guiding the plane down onto an open space in such a crowded area of Mumbai. Shocking footage posted on social media shows the burning wreckage at the construction site, and emergency services surrounding the remains of the plane.
'There was a huge explosion and the adjacent tree caught fire and the fire spilled on the streets,' a man was quoted as saying on the NDTV news channel.
'Initially we assumed an electric box in the under construction building must have caught fire but when we checked out the spot, we found the charred body of a man who apparently was on bike when the plane crashed,' he added. Indian media reported that the plane had belonged to the Uttar Pradesh state government, but had since been sold to a private company.
Authorities said the accident was under investigation and the cause was not immediately known.
It was not raining at the time of the accident and weather did not appear to have been a factor in the crash.
'There bodies were completely charred due to the fire,' she told AFP, adding that two injured had also been admitted and were in a stable condition.
India's National Disaster Response Force said it was also sending a team to make sure no there were no injured trapped under any rubble at the crash site.Former Indian Aviation Minister Praful Patel tweeted his condolences and praised the pilot for the guiding the plane into an open area.
'Salute to the pilot who showed presence of mind to avoid a big mishap, saving many lives at the cost of her own life,' he wrote.
There have been several crashes involving small planes in India in recent years.
In 2015 a light aircraft belonging to India's paramilitary border force crashed after taking off from New Delhi airport, killing 10 people on board.
The last deadly air crash involving a commercial plane happened in 2010 when an Air India Boeing 737-800 over shot the runway while landing at Mangalore airport in southern India.
At least 158 passengers were killed and nearly a dozen others survived the crash
