1How much tax do I pay on rental income?
It's taxed at your slab, but after a flat 30% standard deduction, municipal taxes and home-loan interest — so the effective tax is often much lower than the gross rent suggests.
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ArticleRental income is taxable, but the "income from house property" rules are generous — a flat standard deduction, full interest relief and more. Here's how landlords and rental-property owners legitimately reduce the tax on their rent.
Reviewed by CA Harika Chebolu, FCA · Last updated 2026-06-13
Quick answer
Rental income gets a flat 30% standard deduction, full home-loan interest relief and municipal-tax deductions. Here's how landlords keep more rent.
After deducting municipal taxes paid, you get a flat 30% standard deduction on the net annual value — no bills or proof needed. It's meant to cover repairs and maintenance, and you get it whether or not you actually spent that much, which makes rental income quite tax-efficient.
Property tax and other municipal taxes actually paid during the year are deductible from the rent before the 30% standard deduction is applied. Pay and record them in the year so you don't miss the deduction.
Interest on a loan for the rented property is deductible. For a let-out property the interest deduction isn't capped at the Rs 2,00,000 self-occupied limit — though the overall set-off of house-property loss against other income is capped at Rs 2,00,000 a year, with the balance carried forward. This is a major relief for leveraged landlords.
If a property is genuinely co-owned, the rental income is split in the ownership ratio and taxed in each owner's slab — which can lower the household tax if a co-owner is in a lower bracket. The ownership and funding must be real, not just on paper.
Tenants paying high rent may deduct TDS, and rent often appears in your AIS, so report it fully and claim the TDS credit. Keep the rent agreement, municipal-tax receipts and loan interest certificate to support every deduction.
It's taxed at your slab, but after a flat 30% standard deduction, municipal taxes and home-loan interest — so the effective tax is often much lower than the gross rent suggests.
No — it's a flat 30% of net annual value, with no bills required. You get it whether or not your actual repair spending reaches that amount, which makes rental income tax-efficient.
Yes, and it isn't capped at Rs 2,00,000 like a self-occupied home — though the house-property loss you can set off against other income each year is capped at Rs 2,00,000, with the rest carried forward.
Letting out one or more properties? Write to the firm and we'll make sure every rental deduction is claimed.