File Tax on Property Income
Tax on Property Income
The Income Tax Act of India has a specific head of income, titled to tax the rent received by an owner of a property. So, any rent received with respect to a property that is let out, is taxable under this head. Rent received with respect to a residential house, as well as commercial property, is taxable under this head. Even the rent received for letting out your factory building or rent received on land appurtenant to the building is taxable under this head.
The rental income from a property is taxed under the head ‘Income from house property’.
Tax is applicable on rental income earned from residential houses, commercial properties, factory buildings and even the land appurtenant to the building.
The annual value of a property is deemed to be the higher of: (a) The actual rent received for the property or (b) The reasonable amount that property can fetch, if it is let out.
From the rental income, a property owner is allowed to deduct municipal taxes on the property, rent that is not realised, a 30% standard deduction on the annual value of the property, as well as interest on the money borrowed for the renovation of the property.