Income Tax Rules: Now this much tax will have to be paid on house rent, know the rules of Income Tax Department..
The process of filing an Income Tax Return (ITR) is underway. In this, income taxpayers have to give information about all the sources of their income. Even if you earn income from rental, you still have to pay tax. Not only this, in certain circumstances you have to pay tax even without paying rent.
Rental income is called house property income. House property not only includes your house or apartment but also shop, factory, and office space. There is an exemption from the government that you can show 2 houses for your personal use. This is called self-occupied property. This means that if you do not get rent on these houses, then tax will not be taken from you.
Tax on the third house-
If you have more than 2 houses then the third house will not be considered self-occupied. You will have to pay tax on its rent. The question in your mind will be that if the rent is not received then why will the tax be taken? So let us tell you that it does not matter whether there is rent on the third house or not. You have to pay tax. This tax is paid based on notional rent.
How is the notional rent calculated?
Note that the rent information of different house properties has to be given separately and not together. For this, whichever ITR Form 2/3/4 applies to you, you have to use it. Now let's talk about how to calculate the notional rent. In this, the annual rent is prepared keeping in mind three types of rent. These three factors are – Standard Rent, Municipal Rent, and Fair Rent. How much rent a property similar to yours is generating in that area is called fair rent. Municipal rent is decided by the municipality. At the same time, the standard rent is decided through the Rent Control Act. The landlord cannot charge more rent than this.
On which rent you will have to pay tax-
Since the standard rate is fixed, it will be compared with the upper limit of municipal rent and fair rent. Whichever is less among the two will be considered as notional rent. Tax will be collected from you on this.
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