How is rental income from home ownership charged under income tax regulations in India?


oi-Kuntala Sarkar


According to income tax regulations in India, rental income in the hands of the landlord is taxed under the “real property income” rule. Rental income from someone other than the owner will not be taxed by the government. Thus, any rental income received by a tenant in the context of a sublease will not be subject to tax. Such income will be taxable under the “income from other sources” rule, or business or professional profits and gains.

How is rental income from home ownership charged under income tax regulations

Rule for a person who is not a registered owner of the property

The income tax regulations advise that if a person collecting the rent is not the owner of the property, the rental income will not be taxed as “Income from the ownership of the house”, such as the rent collected by a sublet tenant.

Also, the official income tax guideline mentioned, where a person may not be the registered owner of the property, but will be treated as the owner (i.e. deemed owner) of the property, and the rental income from the property will be taxed in his hands. These cases have been mentioned below.

(1) In the event that, if a person transfers ownership of his home to his spouse (not being a transfer under an agreement to live apart) or to his minor child (not being a daughter married) without adequate compensation, then the assignor will be deemed to be the owner of the property.

(2) If the holder of the impartable estate is considered to be the owner of the property included in the estate

(3) In the event that a member of a co-operative society, society or other association of persons to whom a building (or part thereof) is allocated or leased under the program of house building society, corporation or association, as the case may be, is deemed to be the deemed owner of the property.

(4) Where a person acquiring property by satisfying the conditions of Section 53A of the Transfer of Title Act shall be deemed to be the deemed owner (although he is not the registered owner). Under Section 53A of the said Act, the following conditions are as follows: there must be a written agreement, the purchase price is paid or the buyer is willing to pay it, and the buyer has taken possession of the property in accordance with the agreement.

(5) In the case of a lease of property for a term exceeding 12 years (whether initially fixed or there is an extension), the lessee is deemed to be the owner of the property. However, any right by way of lease on a monthly basis or for a term not exceeding one year is not covered by this provision.

Article first published: Friday, August 5, 2022, 11:53 p.m. [IST]

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