I have rent income. How much is taxable.

[Prabhakar]

I am getting a rent of Rs. 7000 per month. How much can I deduct for maintance and repairs? What is my taxable rent?

[Sunil]

On your annual rental income you will deduct the house tax payment that you paid. From the balance amount, you will get two deductions available under section 24:
a. Standard deduction.
b. Interest on borrowed capital.

Standard deduction: You get 30% rebate for maintenance and repairs (this deduction is called standard deduction).
Also the interest on money borrowed to build, buy or repair the rented property is deductible.

Follow these computation steps:
Gross annual value                                             =     A
Less Municipal taxes actually paid during the year    =     B
Net annual value                                                =     A-B

Less deduction under section 24
   Standard deduction                                          = 0.3 x (A-B) = C
   Interest on borrowed capital                              =      D

Income from house property                                 = (A-B) - C - D

[berry99]

The income tax department will not ask you for the proof the expenses for maintenance and repairs. It means that Prabhakar can deduct 30% of the net annual value even if he did not have the expenses.

[Ekka]

It's clear now how to define the net total income taxable, but can anybody tell me what is the total tax payable? what are the rates now?

what is the whole list of taxes payable on rental income? Municipal tax, service tax, tax on property, education cess,,,what else?

Your knowledge will be much appreciated!

[MyTaxes_Expert]

1. Property tax or municipality tax is by the municipality of the city in which the property is situated. So may be different for each state or even for cities in a state.

2. Service tax rate is 12% plus 3% edu cess (that is 12.36%). Normally it is just like a sales tax and the company that rents the place pays the tax. However, it depends upon the rent agreement.

3. About income tax, it depends upon the business entity. If you are a sole proprietor, HUF or AOP, then refer http://mytaxes.in/index.php?topic=7.0
If you are a partnership firm or a company, then refer http://mytaxes.in/index.php?topic=20.0.

A partnership is treated as a separate entity for tax purpose. A partnerhip with a proper partnership deed is taxed as a partnerhip, and if no partnership deed exists, it is taxed as AOP. Normally it is better to be taxed as partnership. Partnership can pay salary and allowances to the partners (which partners must report of their individual tax returns) and take deduction for it. The partnership profit after paying income tax is not taxable in the hands of partners.

[Ekka]

Very efficient!!!

THANKS A LOT!!!!!