8 Tax Rules To Know Before Renting Out Your Property

Meghna Maiti

Property Tax:

Renting out properties in India triggers taxation under the ‘Income from House Property’ category.

Property Tax

Rental Income Tax:

Rental income is taxed at a rate of 30% based on the property’s NAV under Section 24 of the Income Tax Act.

Rental Income

Municipal Tax:

It is deducted while calculating the property’s NAV. The remaining amount, post-deduction, is subject to taxation based on the slab rate.

Municipal Tax

Tax Deductions:

A standard deduction of 30% of the NAV will apply. Any interest payments on house loans can be claimed as a deduction.

Tax Deductions

Tax Exemption

Tax exemption is allowed for rental income up to Rs 2.5 lakh, applicable for both self-occupied and leased properties.

Exempted From Tax

Maintenance & Repairs:

Subletters can deduct taxes by showing maintenance, repairs, insurance premiums, and depreciation.

Maintenance And Repairs

Subletting Tax:

Subletting income is taxed under ‘Other Sources’, so the standard deduction of 30% does not apply to rental income from subletting.

Subletting Tax

Professional Help:

Tax implications vary based on individual circumstances, so seeking professional advice can help optimise one’s tax position.

Compiled by Himani Verma

Professional Help