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Priyanka Parashar/Mint
Priyanka Parashar/Mint

Rental income from Indian property is taxable

Rental income from property in India is considered as income accrued in India and taxable irrespective of residential status

I have just given my apartment in Bengaluru on rent. Should I pay tax on the rent received? I don’t have any other source of income in India.


Rental income from property in India is considered as income accrued in India and taxable irrespective of residential status. You need to pay tax on this rental income. However, if your total taxable income in India (including rental income or any other source of income) does not exceeds the maximum amount not chargeable to tax (2.5 lakh), you are not liable to pay tax on it. The gross rent received by you is not fully taxable. While calculating the taxable value of rental income, various deductions are available. It includes:

*Standard deduction at 30% of the taxable value;

*Municipal taxes paid to the local authority;

*Interest paid on a loan taken for construction, repairs, acquisition, or renewal of the property;

*Pre-construction period interest deduction (available as deduction in five instalments from year subsequent to construction completion year).

Additionally, any repayment of principal amount against housing loan taken for such property is also eligible for deduction under section 80C (maximum deduction under this section is 1.5 lakh).

I have been working in the United Arab Emirates (UAE) for a year now. I am working here on contract basis where the set-up is such that I am on the payroll of the contracting agent A located in India and working in the UAE with the contracting company B. My contract is being renewed on the following terms: (i) My salary will be deposited in a salary account in the UAE in dirhams and this salary will be transferred from India (i.e., rupee converted to dirhams); (ii) My salary slip will be under the heading of the Indian contracting agent, but will be in dirhams; (iii) The net salary deposited would be gross salary minus 12.5% Employees’ Provident Fund (EPF) deduction (EPF deduction because the contracting agent A is India-based). Is my salary taxable in India?

—Gaurav Kamath

Salary received for services rendered outside India should not be taxable in India unless you qualify as an ‘Ordinarily Resident’ in India. Individuals who qualify can be taxed in India on their worldwide income.

In case you are the employee of a local Indian company, EPF will be deducted from your salary.

Queries and views at mintmoney@livemint.com

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