Rental Income Tax: This time, there was a significant tax-related amendment made to the budget. Finance Minister Nirmala Sitharaman announced that under the new tax system, there will be no tax on income up to Rs 7 lakh; however, if your income exceeds this, you will be have to pay tax. However, you are exempt from paying income taxes up to Rs 10 lakh if your source of income is rent. Let us tell you about some strategies that can spare you from paying taxes on income up to Rs 10 lakh.
Standard Deduction Benefit
If your income is Rs 7.5 lakh or more, you can take advantage of the standard deduction of Rs 50,000 under the new tax regime. If your yearly income exceeds Rs. seven lakhs, you must pay 10% tax on income between Rs. six and Rs. seven lakhs and 5% tax on income between Rs. three and Rs. six lakhs.
Rent Income Exemption
Nonetheless, under the new tax system, an exemption can be claimed if rent income exceeds Rs 10 lakh. You can claim these exemptions under the payment of interest on your house loan and property taxes. It is possible to deduct up to 30% of net annual income for home maintenance and repairs. This implies that you will have a total income of seven lakh and will not be required to pay any taxes, as you can deduct up to Rs 3 lakh from an income of Rs 10 lakh.
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