1. What is Rental Income Tax?

Rental income tax is the tax levied on income earned from renting out property in India. For AY 2025-26, it's calculated after deducting standard allowances (30% of rental income) and actual expenses from gross rental income.

2. How Does the Calculator Work?

The calculator uses the rental income tax formula:

Where:

• \( Rental\ Income \) — Total rent received (INR)
• \( Allowances \) — Standard deduction (30% of rental income)
• \( Expenses \) — Other deductible expenses (INR)
• \( Tax\ Rate \) — Applicable income tax rate (%)

Explanation: The calculation first determines taxable income by subtracting allowances and expenses from gross rental income, then applies the tax rate.

3. Importance of Rental Income Tax Calculation

Details: Accurate rental income tax calculation ensures compliance with Indian tax laws, helps in financial planning, and avoids penalties for underpayment of taxes.

4. Using the Calculator

Tips: Enter all amounts in INR. The standard allowance is automatically 30% of rental income unless you specify a different amount. Include all deductible expenses like property taxes, maintenance, and interest on home loans.

5. Frequently Asked Questions (FAQ)

Q1: What is the standard 30% deduction?
A: This is a blanket deduction allowed for repairs, maintenance, and other expenses without needing receipts.

Q2: Can I claim both standard deduction and actual expenses?
A: No, you must choose between the standard 30% deduction or claiming actual expenses (with receipts).

Q3: What expenses are deductible from rental income?
A: Municipal taxes, interest on home loan, repairs, insurance premiums, and property management fees.

Q4: How is the tax rate determined?
A: It depends on your total taxable income and applicable income tax slab rates for AY 2025-26.

Q5: Is TDS applicable on rental income?
A: If annual rent exceeds ₹2.4 lakh, tenants must deduct TDS at 10% under Section 194-I.