Rental Income Tax in India: Calculate House Property Income and Report Rent in Your ITR

Which tax year applies?

Income for FY 2025–26 is reported in AY 2026–27 under the Income-tax Act, 1961. Income for Tax Year 2026–27 (1 April 2026 to 31 March 2027) falls under the Income-tax Act, 2025. Use the return form and rules for the correct period.

Income from a building or land attached to it is generally taxed under “Income from House Property” when you own the property. An exception applies if you use it for your own business or profession. If a building is let together with machinery or furniture, the income may be taxed under a different head, depending on the arrangement.

How to calculate income from a let-out property

Start with the property’s gross annual value (GAV), then deduct municipal taxes actually paid by you during the year to arrive at its net annual value (NAV). The 30% standard deduction is calculated on NAV. Eligible interest on borrowed capital is a separate deduction.

This example assumes ₹3,60,000 is the correct GAV and the interest is eligible. Vacancy, rent that cannot be realised, or expected rent may change the calculation.

The 30% deduction is allowed whether or not you spent that amount on repairs. You cannot claim actual repairs, society charges or insurance separately in addition to it. Interest on borrowed money is considered separately.

Records to keep

Maintain records of:

• Rent received or receivable, the rental period and the rental agreement;
• Municipal taxes paid by you;
• Home-loan interest certificates and loan details;
• Vacancy periods and rent that could not be realised;
• Any arrears or unrealised rent recovered later; and
• Your ownership share, if the property is jointly owned.

Unrealised rent can be excluded only if the prescribed conditions are met. Arrears and previously unrealised rent recovered later are generally taxable in the year received, after a 30% deduction.

If the tenant deducts TDS, report the rent before TDS and claim the credit separately. Check the credit against your tax records and the tenant’s certificate.

Commercial rent can involve separate TDS and GST questions. See TaxClear’s guide to TDS and GST on commercial rent.

Which ITR should you use?

The correct form depends on your residence status, income sources, property count and other eligibility rules. For AY 2026–27, an eligible resident individual may report income from up to two house properties in ITR-1. Other conditions apply, including the total-income limit and restrictions on certain types of income.

If you do not meet ITR-1 conditions, you may need ITR-2 or another form. The set-off and carry-forward of a house-property loss also depends on the applicable rules and tax regime.

TaxClear’s online ITR filing guide explains the return-filing process.

Common reporting mistakes

• Reporting rent after TDS instead of the gross amount;
• Calculating the 30% deduction on GAV instead of NAV;
• Deducting municipal taxes that you did not pay;
• Reporting all rent when co-owners have definite shares; or
• Treating a refundable security deposit as rent without checking how it was used.

Frequently asked questions

Is rental income taxable if the tenant deducted TDS?

Yes. Report the rental income and claim eligible TDS credit separately.

Can I deduct actual repair expenses?

The 30% standard deduction applies to NAV. Actual repair expenses cannot be claimed separately in addition to it.

How is rent from jointly owned property reported?

Where each co-owner’s share is definite, each generally reports their share of the property income.

Can I use ITR-1 if I rent out a property?

Possibly. Eligible resident individuals can report up to two house properties in ITR-1 for AY 2026–27, subject to the other conditions.

Do these rules cover rent for Tax Year 2026–27?

No. Income for that tax year is governed by the Income-tax Act, 2025. Use the applicable rules and return utility for that period.