Best ways to save tax on rental income

After subtracting municipal taxes from the rent, you get a flat 30% standard deduction on the balance to cover repairs and maintenance — whether or not you actually spent that much. It needs no bills and no proof, which makes it the easiest saving a landlord has.

Property tax and other municipal taxes actually paid during the year are deducted from the rent before the 30% standard deduction is applied. Pay them in the same year and keep the receipts so you don't lose the benefit.

If the rented property carries a loan, the interest is deductible against the rental income. For a let-out property the interest itself isn't capped, though the overall house-property loss you can set off against other income in a year is limited to Rs 2,00,000, with the remainder carried forward.

If a property is genuinely co-owned — funded and titled jointly — the rental income is split between owners in their ownership ratio, so each is taxed in their own slab. For a couple where one spouse has lower income, this can meaningfully reduce the household tax, as long as the ownership is real.

Rent often shows up in the tenant's TDS filings and in your AIS, so under-reporting is easily spotted. Declare the rent, claim the deductions you're entitled to, and keep the rent agreement and tax receipts. The deductions are generous enough that there's no reason to hide income.