Income from Rent

Income from rent received on a property you own needs to be reported as part of your income tax return in India. Here's a breakdown of how to handle it:

Reporting Rental Income:

• The income you receive from rent falls under the category of "Income from House Property".
• You'll need to report the gross annual rent received during the financial year.

Calculating Taxable Income:

• You can deduct certain expenses from the gross rental income to arrive at your taxable income from house property. Here are some common deductions allowed:
  • Municipal taxes paid on the property during the year.
• You can choose one of two methods to further reduce your taxable income:
  • Standard Deduction: You can claim a flat 30% deduction on the gross rental income after subtracting municipal taxes. This is the simpler option.
  • Actual Deductions: You can claim actual expenses incurred for repairs and maintenance of the property. However, you'll need to maintain records to support these deductions.

Tax Implications:

• The tax you pay on the remaining taxable income from house property depends on your tax slab rate.
• Note: There might be a tax implication if the tenant deducts TDS (Tax Deducted at Source) on the rent amount.