In this post we are going to discuss what types of rent income would be included under the head Income from house property.
The first section in the chapter dealing with Income from House property will tell us which type of rent would be included under this head. As per section 22 of the Income Tax Act:
“The annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him the profits of which are chargeable to income-tax, shall be chargeable to income-tax under the head “Income from house property”.
From the above section it is clear that only the annual value of property which included buildings and apputenant thereto of which assessee is a owner would be included for income from house property
Thus the above section gives three main points for an income to be Income from house property:
- It needs to be a “building”. They have not restricted to residential building thus if you rent out any commercial building then also it will be charged to tax under Income from house property.
- “Land appurtenant thereto” which means land belonging to such building thus if you have any land without any building and you rent such land then the income from such rent wont be charged to income tax under the head income from house property and you wont get any benefit of income from house property.
- “assessee is the owner”. Thus if you have rented a property and again sub rent such property then it would be taxed either as income from business and profession or income from other sources but surely not as income from house property.
Now let’s understand few FAQ related to this:
1. Will rent income from a piece of land be taxed as income from house property?
Ans. As discussed above as per the section 22 of the income tax act only the income derived from a building or land adjoining that building will be taxed as income from house property. thus any income from a piece of land without any building cannot be taxed as income from house property and will be taxed as income from other sources.
2. Can rent from a building be taxed under the head Profit from Business and profession?
Ans. In case of company if its mentioned in its AOA that renting is their business then same can be included in his business profit otherwise not.
3. Can we deduct maintenance charges from Rent income over and above 30% standard deduction?
Ans. No.
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