Insights Into Property Taxes Levied In India
Are you a property owner? Then you need to educate yourself on the details of taxes levied on property by the government
. Read on to know how you are taxed on rental income and also income made from the sale of a house.
Rental income refers to regular and continued earning from a property owned by you. And in India you are taxed for this income. The tax is levied on the taxable income from the full and total rental income you earned in a financial year. Your taxable rental income is calculated by firstly calculating your gross rental income. Gross rent is taxable only when it is greater than:
The rental value of your home as calculated by the local municipal corporation. The municipal authority arrives at this figure on the basis of the value of your property and the area it is located in.
The amount of rent your tenant gave you for the financial year.
The amount of rent taken for a property of the same size and in the same location- in other words the fair rent of the property.
So, if your gross rent exceeds all the three values mentioned above, then it is to be taxed. Now the tax auditors calculate the tax you have to pay by firstly deducting the property tax you pay to the local authorities from the gross rent. Here is how we can summarize it:
Gross Rent Received - Property Tax = Net Annual Rental Income
Once you have the figure of your net annual rental income, you have to deduct the permissible amounts from them. These permissible deductions include:
30% of the net rental income spent on the maintenance of the property as well as on collecting rent.
The amount of interest you pay on the home loan you may have taken on this property.
The amount of money you pay as property insurance premiums.
After deducting these amounts (whichever applicable) from your net rental income, the amount left is your taxable rental income. This income is mentioned as income from other sources in your annual tax returns and will then feature in the final tax calculations being made on your total income (salary etc.).
Tax Levied on Property Sales: Capital Gain Tax
You will be taxed when you sell your property because you are most likely to make a profit or as the tax people call it: capital gains. These capital gains are also taxable as they fall under the category of income from other sources in your annual tax returns. Now, capital gain is also of two types and the tax varies according to that. When you sell your home shortly (or within three years) of purchasing it, it is termed as short term capital gain (it can be a loss as well if you sell it at a lower price). Similarly you can make a long term capital gain or loss if you sell your home after owning it for more than three years.
There are certain exemptions in place when it comes to capital gains tax. Under the Section 54F of the IT Act, you are not liable to be taxed if you use the profit aka capital gain from a sale to buy another residential property, or invest in certain bonds of National Highways Authority of India for three years under Section 54 EC.
If you choose not to invest and pay tax instead, the tax is computed as per the indexation method (inflation based calculation). We hope this information helps you understand what you will have to pay when you advertise your
flats for rent in Gurgaon or any other location.
by: Vibha
#
2
I recently tried
buy cbd lotion for the first leisure and was pleasantly surprised by the results. Initially skeptical, I found that it significantly helped with my desire and slumber issues without any noticeable side effects. The lubricator was easy to put to use, with legible dosage instructions. It had a indulgent, shameless liking that was not unpleasant. Within a week, I noticed a decided increase in my total well-being, ardour more serene and rested. I know the regular approximate to wellness CBD offers and representation to at using it.
2024-2-20 19:36
reply
With Some Expert Tax Help, You Can Get A Better Deal From The IRS Importance Of Personal Finance Free Helpful Hint Tax Relief For Investments Free Significant Hint An Easy Guide to Filing Free Federal Tax Return Online SATTA MATKA | KALYAN MATKA GUESSING |SATTA MATKA FAST RESULT |SA Paying Free Federal Income Taxes Before Deadline Best Tip To Avoid Tax Burden From You Hire An Accounting Firm! Promote and Prosper with Income Tax Neon Signs Property Tax Relief- Hint About Property Tax Relief What You Must Know About The Changes In Denmarks Indirect Taxes 2010 Detroit Lions: NFL Predictions, Odds and Betting Picks 4 Benefits of Hiring a Professional Tax Preparer 2010 NFL Predictions: Baltimore Ravens