Author: PEAK Business Consultancy Services | Category: Rental Income Tax Filing – India
Rental income is one of the most common sources of passive income in India. Whether you own a single property or multiple residential/commercial units, it’s essential to declare this income correctly in your Income Tax Return (ITR). Proper disclosure ensures compliance and allows you to claim deductions that significantly reduce your taxable amount.
This comprehensive guide walks you through how to file ITR for house rent income, what deductions are allowed, which form to use, and the common mistakes to avoid. Need assistance? Our experts at OurTaxPartner.com can handle your rental income tax filing end-to-end.
1. Is House Rent Income Taxable?
Yes. Any rent received from letting out a house property is taxable under the head “Income from House Property.” Even if you have just one property that is rented out, the income must be declared.
2. Types of Properties That Generate Rent Income
- Residential homes
- Apartments or flats
- Commercial buildings (offices, shops)
- Partially rented properties (a portion of house)
3. How is Rent Income Calculated?
The formula used is:
Net Annual Value (NAV) = Gross Rent – Property Taxes Paid
Then deductions are applied under Section 24 to compute taxable income.
4. Key Deductions Available Under Section 24
1. Standard Deduction – 30% of NAV
You get a flat 30% deduction from the Net Annual Value for maintenance, repairs, etc. This is available even if you don’t incur any expenses.
2. Interest on Home Loan – Section 24(b)
If you’ve taken a loan for the rented property, you can claim a deduction on the interest paid:
- No upper limit for let-out property
- Restricted to ₹2 lakh for self-occupied property
Our experts help you apply these deductions accurately to minimize tax.
5. What If You Own Multiple Properties?
- You can treat two properties as self-occupied
- All other properties are deemed let-out—even if not rented—and must be declared
- Deemed rent must be calculated based on reasonable expected rental value
6. Tax Treatment for Co-Owners
If a property is co-owned, the rental income must be split based on ownership ratio (as per legal title). Each co-owner must declare their share in their individual ITR.
7. Which ITR Form to Use?
- ITR-1: If you have income from one house property only and total income is below ₹50 lakh
- ITR-2: For income from more than one house property or foreign assets
- ITR-3: If you have rental income + business/professional income
Not sure which form applies? Let us file the correct return for you, hassle-free.
8. Advance Tax and TDS Implications
- If your total tax liability exceeds ₹10,000 in a year, you must pay advance tax in installments
- Tenants paying rent above ₹50,000/month are required to deduct TDS @5% under Section 194-IB
- Failing to deduct or deposit TDS can result in penalties
9. Common Mistakes to Avoid
- Not reporting rental income assuming it’s “small”
- Failing to deduct municipal taxes before applying the 30% deduction
- Claiming standard deduction without rent actually received
- Using the wrong ITR form
- Missing interest deduction on rented property
10. Rental Income from Foreign Properties
If you are a resident in India and own a property abroad that earns rent, it must be disclosed under:
- Schedule FA (Foreign Assets)
- Income from House Property section in ITR
- Double Taxation Avoidance Agreement (DTAA) may allow you to claim relief for taxes paid abroad
11. How OurTaxPartner.com Helps Property Owners
- Accurate calculation of Net Annual Value and deductions
- Proper treatment for multiple properties or co-ownership
- Expert filing of ITR-1, 2, or 3 depending on your income profile
- Advance tax guidance and TDS compliance for landlords
- Support for NRI or foreign rental income reporting
Click here to get your rental income filed accurately and save on taxes
Conclusion
Rental income, while seemingly straightforward, has important tax implications that must be addressed diligently. With the right documentation and professional support, you can not only remain compliant but also reduce your taxable income significantly through standard and interest deductions.
Don’t take chances with real estate income. Let PEAK Business Consultancy Services file your ITR with precision and compliance.
Own a rental property and not sure how to file your return? Visit www.ourtaxpartner.com/filing-service/income-tax-efiling to get expert help today.
