See how rental income tax is calculated for different income levels:
Gross Rent: ₹10,00,000
Expenses: ₹0
Taxable Income: ₹7,00,000
Income Tax: ₹12,000
Total Tax: ₹12,480
Gross Rent: ₹12,00,000
Expenses: ₹0
Taxable Income: ₹8,40,000
Income Tax: ₹24,000
Total Tax: ₹24,960
Gross Rent: ₹15,00,000
Expenses: ₹1,50,000
Taxable Income: ₹9,10,000
Income Tax: ₹31,000
Total Tax: ₹32,240
Gross Rent: ₹20,00,000
Expenses: ₹2,00,000
Taxable Income: ₹12,60,000
Income Tax: ₹76,000
Total Tax: ₹103,040
💡 Tip: Use this tool to understand your rental income tax and see the impact of deductions. For complex situations, multiple properties, or official filings, consult a qualified Chartered Accountant (CA).
Click any section below to expand and learn how rental income taxation works in India under FY 2025–26 rules.
Rental income is any money you earn by renting out a property you own. This includes residential apartments, houses, commercial spaces, and any other real estate you lease to tenants. In India, this income is taxed under the head "Income from House Property" as per the Income Tax Act.
The key principle is simple: Your rental income is added to your total income (salary, interest, etc.), and the combined amount is taxed at progressive slab rates. There's no special flat rate for rental income—it's treated as regular income.
Key Point: Even if you have minimal rental income, you must file an Income Tax Return (ITR) if your gross total income exceeds ₹2.5 lakhs (New Regime) or ₹2.5 lakhs (Old Regime). No exemption applies to rental income.
This is the total rent you receive in a financial year (April to March). If you receive ₹1 lakh per month, your gross annual rent is ₹12 lakhs.
Subtract municipal taxes or property taxes you've actually paid from gross rent. Example: If you received ₹12 lakhs rent and paid ₹50,000 property tax, your NAV = ₹12 lakhs – ₹50,000 = ₹11.5 lakhs.
Deduct 30% of NAV automatically. This represents maintenance, repairs, upkeep, and management costs—no receipts needed. Example: 30% of ₹11.5 lakhs = ₹3.45 lakhs. Amount after deduction = ₹11.5 lakhs – ₹3.45 lakhs = ₹8.05 lakhs.
If you have a home loan on the rental property, deduct the entire interest portion (not principal). Limit: For residential properties, capped at ₹2 lakhs per year; for commercial properties, unlimited.
This is your income after all deductions. This amount is added to your salary, interest income, and other income sources to form your total taxable income.
Your total taxable income is taxed at progressive slab rates. Your rental income doesn't have a special rate—it's blended with other income and taxed together.
If total income exceeds ₹50 lakhs, surcharge is applied on top of income tax.
This 4% tax applies to (income tax + surcharge) for all taxpayers.
The 30% standard deduction is the single biggest tax benefit for landlords. It's automatic, requires no documentation, and applies to all residential property owners.
What it is: A fixed 30% deduction of your Net Annual Value (NAV) representing notional costs for maintenance, repairs, upkeep, and property management.
Why it matters: Without this deduction, you'd need to claim actual expenses with receipts—complicated and risky. The 30% standard deduction is automatic and safe.
Net Annual Value (NAV) is critical to understand because all deductions are calculated on NAV, not gross rent.
Formula:
NAV = Gross Rent Received – Municipal Taxes (Actually Paid)
Important: Only municipal/property taxes you actually paid reduce NAV. Income not received (vacancy) and other expenses don't reduce NAV. Only the 30% deduction applies to NAV.
If you have a home loan on your rental property, you can deduct the entire interest portion from your taxable rental income.
Key rule: Only interest is deductible, not principal repayment. Your loan EMI = Interest + Principal. Only the interest part is a tax deduction.
Important Distinction: For self-occupied properties, interest is capped at ₹2 lakhs. For rental properties, it's also capped at ₹2 lakhs. However, if you've already taken the cap for a self-occupied property, you can't use it again for a second self-occupied property.
Rental income is added to your total income and taxed at these progressive slab rates under the New Tax Regime:
| Income Range | Tax Rate |
|---|---|
| ₹0 – ₹4,00,000 | 0% (No tax) |
| ₹4,00,000 – ₹8,00,000 | 5% |
| ₹8,00,000 – ₹12,00,000 | 10% |
| ₹12,00,000 – ₹16,00,000 | 15% |
| ₹16,00,000 – ₹20,00,000 | 20% |
| ₹20,00,000 – ₹24,00,000 | 25% |
| ₹24,00,000 and above | 30% |
Example: If your taxable rental income is ₹10 lakhs:
Surcharge and cess are additional taxes on top of income tax. They apply when income exceeds certain thresholds.
| Total Income Range | Surcharge Rate |
|---|---|
| ₹0 – ₹50 lakhs | No surcharge |
| ₹50 lakhs – ₹1 crore | 10% on income tax |
| ₹1 crore – ₹2 crores | 15% on income tax |
| ₹2 crores – ₹5 crores | 25% on income tax |
| ₹5 crores and above | 37% on income tax |
A fixed 4% tax applies to (income tax + surcharge) for all taxpayers, regardless of income level.
Scenario 1: Income tax ₹40,000, total income below ₹50L
Scenario 2: Income tax ₹10 lakhs, total income ₹60 lakhs
If a tenant pays you rent exceeding a certain amount, they may deduct TDS (Tax Deducted at Source) and remit it to the government.
Your tenant pays you monthly rent of ₹60,000 (₹7.2 lakhs annually). 10% TDS = ₹72,000
The TDS amount is adjusted against your final tax liability. If TDS exceeds your actual tax, you get a refund. If your tax exceeds TDS, you pay the difference.
India offers two tax regimes. Most taxpayers benefit from the new regime, especially if they have rental income, because the 30% standard deduction works in both.
New Tax Regime (Default)
Old Tax Regime
For rental income: Most landlords benefit from the new regime because the lower slab rates (0-30%) outweigh the loss of 80C/80D deductions.
If you have rental income, you must file an ITR. The form you file depends on your total income composition.
ITR must be filed by July 31 of the financial year following the income year. Late filing penalties apply after this date.
📌 Important: This calculator estimates tax based on typical scenarios. Before filing your ITR or making tax decisions based on this tool, always verify with a qualified tax professional who can review your complete financial situation.
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Last Updated: 1 February 2025
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