Income from House Property is one of the five heads of income under the Indian Income Tax Act. It refers to the rental income earned from a residential or commercial property owned by an individual, partnership, or company. Even if the property is not rented out (i.e., it's vacant or self-occupied), it may still be taxed based on its notional rental value, subject to certain exemptions.
This income is taxable whether the property is residential, commercial, or industrial, as long as it is not used for the owner’s own business or professional activities. The taxation is based on the Annual Value of the property, which is calculated after considering standard deductions like municipal taxes and a 30% standard deduction under Section 24 for repairs and maintenance.
From a compliance point of view, taxpayers must accurately report any rental income or deemed rental income under this head when filing their income tax returns. Misreporting can lead to scrutiny, penalties, or interest charges. Moreover, understanding this head is crucial when planning for tax savings, buying a second home, or availing of housing loans, as deductions on interest and principal repayment are linked with this category.
For salaried individuals and small business owners who invest in property for rental returns, correctly declaring Income from House Property ensures smooth tax filing and compliance. For detailed guidance and personalized assistance, you can visit FinTax24’s Income Tax solutions page.
This head is relevant not only during annual tax filing but also while calculating advance tax liability and while applying for home loan benefits under the Income Tax Act.