A small plane crashed into a construction site in a densely populated part of India's financial capital Mumbai on Thursday, killing five people including one on the ground, officials said.

Images broadcast on Indian news channels showed flames and black smoke billowing from the area, which sits right next to several high-rise residential towers.

There were four people on the 12-seater aircraft, disaster management officials said, with witnesses reporting hearing a loud blast as it smashed into a half-built structure.

"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.

A woman, who was also not named, reported hearing three loud explosions and described seeing a "major fire".

Video footage posted online showed bright orange flames licking the side of a building next to a construction site.