I have let out my house on rent of ₹30,000 per month. Is any deduction allowed on this amount before being offered to tax —such as property tax paid, maintenance, etc?
Mahesh
The Income Tax Act provides for specific deductions while computing the taxable income from house property. Accordingly, such deductions are:
a. Property/Local/Municipal taxes: These taxes are allowed as a deduction from gross rent received only on payment basis.
b. A standard deduction at 30 per cent on the net annual value (gross rent less property/local/municipal taxes) is allowed as a deduction. This is irrespective of whether expenses are incurred or not on house property. It is important to note that monthly maintenance paid for the flat/apartment to the association is not allowed as a deduction.
c. Interest on loan taken for purchase/construction/repair/renovation of the property. Interest is allowed as deduction on due basis.
d. Pre-construction interest (interest paid before the period in which construction was completed) is allowed in five equal instalments from the year in which construction was completed.
a. Interest paid outside India shall be allowed as deduction only if TDS was deducted on such interest payment.
The author is Partner, Deloitte India
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