How to reduce income tax on rental income

Published By Sharmila Bhadoria | 15 Oct, 2022

Rent from property is added to the total income and taxed at applicable tax slab

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For tax purpose, properties are classified as self-occupied, let out, or deemed to be let out. 

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A taxpayer is allowed to declare up to two properties as self-occupied

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He does not have to pay rental tax on them.

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All other properties besides the two self-occupied ones attract tax on rent

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Notional rent is equivalent to the gross annual value (GAV) of the property, as per tax laws

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Municipal rent amount, fair rent, is used to determine notional rent

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A standard deduction of 30% is allowed on rent from let out and deemed to be let out properties

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You can deduct municipal taxes before arriving at standard deduction

Home loan interest up to ₹2 lakh for self-occupied and deemed to be let-out properties is available as deduction

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For let-out properties, the entire interest amount paid can be deducted

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