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Objectives Visceral leishmaniasis (VL) is a major public health problem in Bihar, India. Unfortunately, accurate data on the incidence or prevalence of the disease are not available. This longitudinal study was undertaken to determine the incidence of VL in a Community Development Block area of the state of Bihar. Survey results were compared with official reports of the disease to assess the extent of underreporting by the Government health system. Methods Three health subcentre areas in Kanti Block, consisting of 14 villages with a total population of 26 444, were selected. Active surveillance was performed every month from January 2001 to December 2003 by house to house survey to detect cases of fever for more than 15 days. Patients clinically suspected of suffering from VL were subjected to parasitological examination for confirmation. Analysis of records of the reporting agencies in the district was undertaken to compare and assess the extent of underreporting. Results A total of 202 cases of VL were identified in 3 years giving an average annual incidence rate of 2.49/1000 population (95% CI = 2.15–2.83). As identification data of patients was not available with the official reporting agencies for 2001 and 2002, extent of underreporting could be assessed for 2003 only. In the study population, 65 cases of VL were detected during 2003 providing an annual incidence rate of 2.36/1000 population. Only eight (12.30%) cases were reported officially, resulting in underreporting by a factor of 8.13. In 2003, the official incidence rate of VL for Kanti Block was 0.31/1000 against the actual rate of 2.36/1000. As the constraints for official reporting at the block and the district levels are similar, the underreporting at district level was also assumed to be similar. This finding has significance in the preparation for elimination programme. [ABSTRACT FROM AUTHOR]