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Everyone dreams of owning a home one day, saving for it, and hoping to attain it one day. Owning a residential property, on the other hand, comes with duties. One of them is paying annual property taxes on a home. However, the Income Tax department also provides tax rebates and I can claim to help save tax on rental income. Sounds exciting, already? But hold on! Do you know how to calculate and estimate your taxes based on your rental income? Let us read more about this rental income tax calculator or rent income tax calculator in this blog.
Rental income gets taxed as “income from house property.” The income tax agency grants some relief to property owners who rent out their property. As a result, while filing the income tax return (ITR), one must use the income tax calculator correctly since one’s gross rental income equals the total yearly rent minus municipal taxes paid in that fiscal year. Aside from that, the property owner is entitled to a 30% standard deduction on gross rental revenue.
Post entering the necessary information, the rent income tax calculator will calculate the tax bill using the present tax slabs plus deductions offered. The rental tax calculator’s computations are simply an estimate. So, it should not be regarded as a final tax liability. For correct information, it is ideal to speak with a tax specialist or visit the official government website.
But, firstly, what is rental income?
Rental income from a property gets referred to as passive income. Nevertheless, it maintains the cash flow may appear to be different. In an ideal world, a landlord would remain uninvolved in day-to-day operations of upkeep in order to maximize return on investment. Property owners have a lot on their plates, and they should actively participate in the maintenance and remodeling processes to maximize their rental income. They must also take an active role in rental income collection and tenant grievance resolution.
Do not miss Desire steady rental income? Here’s How Fractional Ownership Can Help You Achieve That.
So, what is a tax on rental income in India?
Rental income from property – a building and the land – is taxed under Section 24 of the Income Tax Act. It gets taxed under the category of income from housing property.
The cash received in return for a property is referred to as “Rental Income” under India’s existing tax regulations if it gets leased or rented. Any advance payment provided as a security deposit gets included. According to the IPC, the rental income is substantial and should get taxed under Section 24 of the Income Tax Law. Furthermore, there is no distinction between residential and commercial property for the government. Even a parking lot connected to your company or home is considered real estate and is taxed if rented out.
House property is any structure-shaped property that may be taxed. In India, 30 percent of your rental income gets taxed as a standard deduction under the heading income from housing property. The applicant must be the lawful owner of a property to qualify for this standard deduction rate. While income tax rules impose some taxes on a person who earns rent from a rental property, the taxpayer is also entitled to certain deductions from such income.
And what is the rental income tax rate in India?
The gross rent received is not subject to taxation.
Municipal taxes on the property may get deducted from the rental revenue on the property. Since rent gets taxed on an accrual basis, the law allows you to claim a deduction for rent that you were unable to realize, subject to certain conditions. So, after removing the two elements, you get the yearly value, from which you may remove 30% of the annual value to pay repairs, etc.
Also, read The 18% GST on rent gets anticipated to harm the rental housing industry.
The 30% deduction is a standard deduction, regardless of whether you spent money on home repairs or renovations during the tax year in issue.
Also, see: Understand the Impact of GST on Rental Income Under GST?
So, what is the rental income tax calculator?
The income tax calculator is a simple online application that allows you to estimate your taxes depending on your earnings once the Union Budget is released. So, one can also calculate the taxes on rental income by using an income tax calculator.
Also, read Union Budget 2023-24 Highlights | Income Tax New Slab Rates.
One can use the Income Tax Calculator for rental income for the Fiscal Year 2023-24 as follows:
- Select the fiscal year for which you want your taxes computed.
- Choose your age wisely. In India, tax duty varies according to age group.
- Select ‘Go to Next Step.’
- Enter your taxable pay, which is your wage subtracting different exemptions like HRA, LTA, standard deduction, and so on. (If you want to see what your tax burden would have been under the former tax slabs)
Alternatively, input your salary without exemptions such as HRA, LTA, standard deduction, professional tax, etc. (If you want to find out what your tax burden would be under the new tax slabs)
- In addition to taxable salary, you must include interest income, rental income, interest paid on a house loan for rented property, and interest paid on a loan for self-occupied property.
- Click ‘Go to Next Step’ once more.
- If you want to use the prior tax slabs to calculate your taxes, you must include your tax-saving investments in sections 80C, 80D, 80G, 80E, and 80TTA.
- To calculate your tax liability, click the ‘Calculate’ button. You’ll also be able to compare your pre-and post-budget tax liabilities (old tax slabs and new tax slabs).
- You can put “0” in any field that is not applicable.
- Finally, you can also receive your tax computation on your email ID.
The Benefits of an Updated Rental Income Tax Calculator
Among the benefits of the rental income tax calculator are:
- Ease: You may quickly access and utilize the rental income tax calculator online at any moment, saving you effort and time.
- Accuracy: The rental income tax calculator considers the most recent tax rules and regulations in India, guaranteeing that the computations are correct.
- Transparency: The rental income tax calculator gives you a clear and comprehensive summary of your taxable income, deductions, and tax dues. Thus, helping you to better understand your tax responsibilities.
- Simple to Use: The rental income tax calculator is simple to use, especially for people with little knowledge of tax legislation.
- Time Saver: When compared to manual calculations, the rental income tax calculator saves time and effort by automating the calculating process.
- Prevent Penalties: By giving correct estimates, the rental income tax calculator assists you in avoiding errors that may result in tax department fines.
Altogether, the new rental income tax calculator is a valuable tool for house owners plus renters to comprehend and prepare for their tax liabilities.
Finally, the rental income tax calculator is a useful tool for homeowners plus renters in India who want to comprehend and prepare for their tax responsibilities. The calculator delivers precise and straightforward estimates by applying the most recent tax rules and regulations, reducing effort and time as opposed to manual calculations. Nevertheless, remember that tax laws plus rules in India will change. So, always counsel a tax adviser to obtain the most up-to-date and correct information.
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Rental Income Tax Calculator For India In 2023-2024 FAQ’S:
How do you calculate tax on a rental property?
The Annual Taxable Value of the property is estimated by subtracting municipal taxes paid and deducing u/s 24 from the actual rent received/receivable/deemed rent. Section 24 allows for two deductions: a standard deduction of 30% of the value obtained after deducting taxes from rent and interest on a house loan. It also allows 10% of the value obtained after deducting taxes from rent and interest on a home loan.
How much rental income gets tax-free?
If you borrowed money for purchasing, constructing, or repairing/renovating a property, you may additionally claim a deduction for the interest paid on that money. The money can get borrowed and does not have to be in the form of a house loan. Currently, there is no limit on the amount of interest you can deduct from your rental income.
What is the income tax slab for AY 2021 22?
The income tax slab for AY 2021-22 are:
| Income tax slab | Income Tax Rate |
| Up to ₹ 2,50,000 | Nil |
| ₹ 2,50,001 – ₹ 5,00,000 | 5% above ₹ 2,50,000 |
| ₹ 5,00,001 – ₹ 7,50,000 | ₹ 12,500 + 10% above ₹ 5,00,000 |
| ₹ 7,50,001 – ₹ 10,00,000 | ₹ 37,500 + 15% above ₹ 7,50,000 |
| ₹ 10,00,001 – ₹ 12,50,000 | ₹ 75,000 + 20% above ₹ 10,00,000 |
| ₹ 12,50,001 – ₹ 15,00,000 | ₹ 1,25,000 + 25% above ₹ 12,50,000 |
| Above ₹ 15,00,000 | ₹ 1,87,500 + 30% above ₹ 15,00,000 |
