Rental income is taxable in India under the head "Income from House Property", but the rules are friendlier than most landlords realise. Understanding rental income tax, the deductions you are entitled to, and when TDS on rent applies can meaningfully increase what you keep.
How rental income is taxed
Tax is charged on the Net Annual Value — broadly, the rent received (or expected) less municipal taxes paid. From this you get:
- A flat 30% standard deduction under Section 24(a) — for repairs and upkeep, claimable even if you spent less.
- Home-loan interest under Section 24(b) — deductible, subject to the applicable limits and tax regime.
- Municipal/property taxes actually paid during the year.
When does TDS on rent apply?
Section 194-IB: an individual or HUF paying rent of more than ₹50,000 per month to a resident landlord must deduct TDS (a 2% rate applies where the landlord has provided PAN; 20% if PAN is missing) and deposit it using Form 26QC — no TAN required.
Section 194-I: businesses and audited entities paying rent above the prescribed annual threshold deduct TDS at the applicable rate (commonly 10% for land/building).
Payments to NRIs (Section 195): rent paid to an NRI landlord attracts TDS at a higher rate. Rates and thresholds change with each Budget, so confirm the current figures with a CA.
Filing cleanly
Keep your rent agreement, rent receipts, municipal-tax challans, loan-interest certificate and TDS records together. A manager who reconciles rent, expenses and TDS every month turns year-end filing from a scramble into a 10-minute review.
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Talk to our property experts →Related guides
- NRI Property Management in India: The Complete Guide
- Rent Agreement in India: Registration, Stamp Duty & Clauses
- Self-Managing vs Hiring a Property Manager
Frequently asked questions
Is the 30% standard deduction available to every landlord?
Yes. A flat 30% of the Net Annual Value is deductible under Section 24(a) regardless of your actual repair spend, after deducting municipal taxes paid.
At what rent does TDS on rent start for individuals?
Under Section 194-IB, individuals/HUF must deduct TDS when monthly rent to a resident exceeds ₹50,000. The current rate is 2% where PAN is available (20% if not), deposited via Form 26QC.
How is rent paid to an NRI taxed?
Rent paid to an NRI is subject to TDS under Section 195 at a higher rate than for residents. A lower-deduction certificate or DTAA benefit may reduce it. Confirm current rates with a chartered accountant.
