ITR for Rental Income

Important Keyword: Income from House Property, Income Tax, ITR for Rental Income.

ITR for Rental Income

House property income pertains to the earnings derived by an individual from a property owned and leased out for residential or commercial use. Whether you possess a house or generate rental income, it must be disclosed as Income from House Property in your Income Tax Return (ITR). The taxpayer is responsible for computing the income and paying taxes on rental income based on applicable slab rates.

Under the head ‘Income from House Property,’ taxpayers should report the following types of income:

1. Rent Income from House Property: Any income earned from renting out a house property, whether residential or commercial, should be reported. This includes the rent received from tenants.
2. Vacant House Property: If a house property is vacant and not rented out, the potential rental income or deemed rental value should be reported as income under this category.
3. Housing Loan on a Property: If a taxpayer has taken a housing loan for the acquisition, construction, repair, or renovation of a property, the interest paid on the loan is eligible for deduction under this head of income.
4. Jointly Owned House Property: If the property is jointly owned by multiple individuals, each co-owner must report their share of the rental income or deemed rental value under this head of income.

Calculation of Rental Income

Particulars	Self Occupied Property	Let Out Property
Gross Annual Value (GAV)	NIL	XXX
Less: Municipal Tax Paid	NIL	(XXX)
Net Annual Value (NAV)	NIL	XXX
Less: Standard Deduction u/s 24 @ 30% of NAV	NA	(XXX)
Less: Interest on Borrowed Capital u/s 24	(XXX)	(XXX)
House Property Income	XXX	XXX

Under Section 24, taxpayers are entitled to a standard deduction of 30% of the Net Annual Value (NAV) of the property, regardless of actual expenditure on insurance, repairs, water supply, etc. Taxpayers can claim a maximum loss of INR 2,00,000 under the head ‘Income from House Property’ in a financial year.

Pre-construction interest, paid during the pre-construction period, is deductible in five successive financial years starting from the year in which construction was completed.

For co-owned self-occupied house property, each co-owner can claim a deduction of up to INR 2,00,000 for housing loan interest, with the annual value (NAV) being NIL for each co-owner.

For co-owned let-out house property, income is calculated as per normal provisions of House Property and then apportioned among each co-owner, who can claim the deduction for housing loan interest.

Tax benefits on rental income include deductions for repayment of loan principal under Section 80C, deduction for interest on home loan under Section 24 of House Property, and additional deductions under Sections 80EE and 80EEA for first-time homebuyers, subject to prescribed conditions.

Regarding TDS on rental income:

• Under Section 194I, TDS on rent of land or building is deducted at 10% if the rent amount exceeds INR 2,40,000 per annum.
• Under Section 194IB, TDS on rent of land or building is deducted at 5% by individuals or HUFs not liable to tax audit, if the rent amount exceeds INR 50,000 per month or part of the month.

Landlords receive Form 16A from tenants once they file the TDS Return every quarter. Landlords can view TDS Credits in Form 26AS on the income tax website and claim the TDS credit in the Income Tax Return.

ITR Form for Rental Income

Taxpayers should select the appropriate Income Tax Return (ITR) form based on their total income, type of house property income, and income under other heads. Here’s a summary of the ITR forms applicable for rental income:

ITR Form	Total Income	HP Income
ITR 1 or ITR 4	Upto INR 50 lacs	One House Property
ITR 2 or ITR 3	More than INR 50 lacs	Multiple House Property

House Property Loss incurred in a financial year can be set off against any other income in the same year. If there’s any remaining loss after set-off, it can be carried forward for up to 8 years. However, the carried forward loss can only be set off against house property income in future years.

According to the Income Tax Act, a taxpayer who files a Belated Income Tax Return under Section 139(4) cannot generally carry forward losses to future years. However, an exception is made for house property losses. Even if a taxpayer files a Belated Return, they can still carry forward house property losses to future years for set-off against house property income.

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Official Income Tax Return filing website: https://incometaxindia.gov.in/