Smart parking is becoming more and more an integral part of smart city initiatives. Utilizing and managing parking areas is a challenging task as space is often limited, finding empty spaces are hard and citizens want to park their vehicles close to their preferred places. This becomes worse in important/posh areas of major metropolitan cities during rush hour. Due to unavailability of proper parking management system, citizens have to roam around a lot in order to find a suitable parking area. This leads to the wastage of valuable time, unnecessary fuel consumption and environmental pollution. This paper proposes a smart parking management system (SPMS) based on multiple criteria based parking space reservation algorithm (MCPR) that allows the driver/owner of vehicles to find and reserve most appropriate parking space from anywhere at any time. The system also considers the concept of dynamic pricing strategy for calculating parking charge in order to gain more revenue by the government agencies as well as private investors. The system employs sensors to calculate concentration index, average inter-arrival time of vehicles of a parking area for better parking management and planning. The simulation results show that proposed system reduces the average extra driving required by the users to find a parking area and hence it will reduce traffic congestion, which in turn reduces air pollution caused by unnecessary driving to find a proper parking area. @en