Rental Income – Are you looking to understand rental income in India? This guide will help you understand the meaning and definition of rental income in India. We’ll explain the different types of rental income and how to calculate it, as well as the tax implications of rental income in India. With this guide, you’ll be able to make informed decisions about your rental properting earning and ensure you’re compliant with the applicable laws.
How to Calculate Rental Income in India
Rental income is the income you receive from renting out a property. It is calculated by taking the total rent collected during a given period, minus any expenses associated with the rental property. This includes expenses such as property taxes, insurance, repairs, maintenance, and utilities.
To calculate rental income in India, you will need to know the total rent collected for the period of time in question. This can be obtained from the tenant or from your rental agreement. Once you have this information, you can subtract any expenses associated with the rental property. This includes property taxes, insurance, repairs, maintenance, and utilities.
Once you have calculated the total rent collected minus any expenses, you will then need to calculate the net Rental Revenue. This is done by subtracting any depreciation that may have occurred during the period of time in question. Depreciation is the decrease in value of the property due to wear and tear, age, or obsolescence.
For example, suppose you have a residential property that you rent out for Rs. 20,000 per month. In a year, you will receive Rs. 2,40,000 in rent.
If you paid Rs. 20,000 in property tax, Rs. 10,000 in repair and maintenance expenses, and Rs. 40,000 in mortgage interest, then your allowable deductions would be Rs. 70,000.
Subtracting the allowable deductions from the actual rent received, we get Rs. 1,70,000 as your taxable rental income.
You would then add this amount to your other sources of income, such as salary or business income, and calculate your total income tax liability at the applicable income tax slab rate.
GST Tax on Rental Income
If you are a landlord in India, it is important to understand the basics of calculating Goods and Services Tax (GST) on rental income. GST is a tax that is levied on the supply of goods and services in India and is applicable to landlords who are renting out their properties.
GST is calculated on the basis of the rental income that a landlord receives. The GST rate applicable to rental income depends on the type of property being rented out. For residential properties, the GST rate is 5%, while for commercial properties, the GST rate is 18%. The GST rate also varies depending on the state in which the property is located.