All of you have to know about tax treatment on rental income – CNBC TV18

The income from property is a relatively common source of income in India and it falls within a bracket of taxable income. Rental income is considered taxable under the ‘Income from House Property’ category. As property owners in India, it is necessary to understand how to optimize tax benefits and claim deduction is quite low in your tax liability.

The income taxation of rent is calculated based on the annual value of the property, which is higher than the real rent or expected rent. In particular, there is no taxable income for self-conscious properties, as no rent is earned on it.

If the property is hired, the income of pure fare after cuts is added to your overall tax liability. Some cuts are allowed when calculating taxable fare income. These include 30% standard deduction from net annual value, interest on house loans (under Section 24 (B)), and municipal taxes occurring during the financial year. Any other income, such as advance fare or rent arrears, should also be reported in the respective year.

Benefits available for rental income:

– A flat 30% deduction is allowed at a net annual value of the property. This includes expenses such as repair and maintenance regardless of real expenditure.

– If you have a home loan, you can claim your interest payment as deducted under Section 24 (B). There is no upper limit on interest cuts for rent assets.

– Property and municipal taxes paid during the year are cut off from your gross fare revenue if they are paid by you, not tenants.

– If the property was uninhabited for the year part and you were unable to rent it, you can cut the vacancy loss.

– You can claim deduction for interest paid on a house loan during construction phase, divided into five identical installments starting with the year when the property is complete.