Renting out properties in India triggers taxation under the ‘Income from House Property’ category.
Rental income is taxed at a rate of 30% based on the property’s NAV under Section 24 of the Income Tax Act.
It is deducted while calculating the property’s NAV. The remaining amount, post-deduction, is subject to taxation based on the slab rate.
A standard deduction of 30% of the NAV will apply. Any interest payments on house loans can be claimed as a deduction.
Tax exemption is allowed for rental income up to Rs 2.5 lakh, applicable for both self-occupied and leased properties.
Subletters can deduct taxes by showing maintenance, repairs, insurance premiums, and depreciation.
Subletting income is taxed under ‘Other Sources’, so the standard deduction of 30% does not apply to rental income from subletting.
Tax implications vary based on individual circumstances, so seeking professional advice can help optimise one’s tax position.
Compiled by Himani Verma