Objectives Increase in aging population is expected to lead to increasing prevalence of dementia in India. In this study, we aimed to determine prevalence, incidence, and mortality of dementia and its subtypes and assess dementia burden in terms of disability‐adjusted life years (DALY). Methods A community study was conducted over 5 years (2003–2008) in Kolkata, India, on 100,802 (males 53,209) randomly selected subjects to assess prevalence and capture data on incident cases and deaths. Standard case definitions were used. The data were used to estimate years of life lost (YLL) due to premature mortality, years of life lived with disability (YLD), and DALY, based on Global Burden of Disease 2010 approach. Results During 2003–2004, there were 103 (men 55) cases of dementia. The prevalence was 1.53% (age adjusted 1.12%) at age ≥65 years. In those ≥55 years age, average annual incidence rate of dementia was 72.57 per 100,000. All‐cause standardized mortality ratio in dementia cases was 4.74 (men 6.19, women 3.03). The burden of dementia in 2007–2008 revealed that overall YLL was 47.13 per 100,000 and YLD ranged from 1.87 to 16.95 per 100,000 depending on the clinical severity of dementia. The overall DALY lost per 100,000 due to dementia for the year 2007–2008 was 74.19. Conclusions This community study revealed a low prevalence and incidence of dementia with consequent low DALY‐derived burden of illness compared with many industrialized nations. YLL formed major component of DALY indicating premature mortality to be an outcome of dementia burden. Copyright © 2016 John Wiley & Sons, Ltd.