In this paper, a model based estimation scheme has been proposed to estimate density incorporating the heterogeneity and lane indiscipline observed in Indian traffic. In order to incorporate lane indiscipline, the road stretch under study was considered as multiple parallel strips. Time occupancy and composition based weighted vehicle length were used to incorporate heterogeneity. Then, using these, a single state non-continuum macroscopic model was developed with density as the state variable and time occupancy as the output variable. The Kalman filtering technique was used for dynamic estimation of density. The estimator was corroborated using data generated from a microscopic traffic simulation software, VISSIM. Results obtained showed that the proposed approach could provide accurate density estimates and reproduced traffic characteristics better than without considering lane indiscipline. © 2019 IEEE.