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How do people account for rental income while filing IT returns?

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How do people account for rental income while filing IT returns?

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Data?1494421730 answered

Rental income is taxable under the head Income from house property However you are allowed a flat deduction of 30% of the rent received during the year. In addition you are also allowed to claim the full interest paid on money borrowed for purchase or construction of the house. The property may be self occupied or let out. If a person owns more than one house property he can claim income as NIL for any one of the properties provided he has to declare that due to employment/professional/business reasons he is not able to live in the house and he derives no income from it. The assesses can offer income from rent for the actual period of letting and actual amount received. Only when it is kept vacant and does not fulfill the exigency as stated above the rent realizable for the entire 12 months is adopted. In the case of let out property there is no restriction on interest on borrowed loan but however in the case of self occupied property it is restricted. Further in both the cases the person can avail deduction upto a maximum of Rs.150000/- towards repayment of loan from approved financial institutions/STATE/CENTRAL GOVERNMENT ETC., under Sec 80C ental income is taxable u/s 22 under the head 'income from house property' as per Income Tax Act, 1961. COMPUTATION OF INCOME FROM HOUSE PROPERTY: Gross annual value xxx less : municipal tax xxx Net annual value xxx less: Deduction u/s 24 Standard deduction (30%) xxx Interest on borrowed capital xxx Income from house property xxx In case of rental income it can come into three heads depending upon which type of rental income it is and as per its nature we have to classify into ITR. But if rental income is from agricultural land used for agriculture purpose, it will be exempt from tax. Firstly if rental income is from house property will come under the head of Income from House Property & filed in ITR in this head. It will come even if the assessee has a business of renting of house property. Secondly if rental income is from other than house property the we have to look at whether it is a business of assessee or not. If it is then it will come under the head of Profits & Gains from Business & Profession. If it is not the business of assessee then it will come under head Income from Other Sources.

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