Deductions like municipal taxes and the 30% standard deduction (for let-out property) are available under both old and new regimes.
June 19, 2026 17:23 IST
If rent is your only source of income, you may assume that filing an Income Tax Return (ITR) is unnecessary. However, that is not always the case.
The obligation is based on the total income thresholds and not the number or type of income sources. Even if your only income is rent, you must file an ITR if your gross total income exceeds the basic exemption limit or you meet specified conditions like high-value transactions. Non-filing can attract penalties and scrutiny.
Rental income from residential or commercial properties is taxable under the head “Income from House Property.” Property owners must declare the rent received or receivable during the financial year while filing their tax return.
If you solely rely on rental income, you are mandated to file an Income Tax Return (ITR) if your total taxable income surpasses the basic exemption threshold of Rs 3 Lakh under the new tax regime and Rs 2.5 Lakh under the old tax regime for regular citizens under 60 years of age.
Before determining whether you qualify for the exemption limits, the Income Tax Department permits you to deduct certain expenses from your total rent to calculate your net taxable rental income. These expenses include municipal taxes, a standard deduction of 30% of the Net Annual Value for repairs and maintenance, and home loan interest paid, which can be claimed as a deduction under Section 24b only if the property was purchased with a loan.
You must submit your ITR for the Financial Year 2025-26 (Assessment Year 2026-27) by July 31, 2026, by keeping in mind that failing to file ITR on time attracts penalties under Section 234F.
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How do the rules differ under the old and new tax regimes for taxpayers with only rental income?
Rental income is taxable under both regimes, but key deductions differ.
“Deductions like municipal taxes and the 30% standard deduction (for let-out property) are available under both old and new regimes. Interest on a housing loan is also allowed in both cases; however, under the new regime, any resulting loss from house property cannot be set off against income under other heads,” said Deepashree Shetty, Partner, Global Mobility Services, Tax & Regulatory Advisory at BDO India.
Taxpayers must evaluate which regime results in lower liability.
What deductions can landlords claim against rental income?
Landlords can claim municipal taxes actually paid, a flat 30% standard deduction for repairs and maintenance, interest on housing loans and pre-construction interest in instalments over five years. These deductions significantly reduce taxable income from house property.
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How does the 30% standard deduction under Section 24 work for rental income?
Tax laws allow a flat 30% deduction on the net annual value of the property, irrespective of actual expenses incurred.
“This means even if your maintenance costs are lower or higher, the deduction remains fixed at 30%. It simplifies compliance while ensuring a uniform benefit,” commented Deepashree Shetty.
Which ITR form should a taxpayer with only rental income use for AY 2026-27?
Choosing the correct form is essential to avoid processing delays.
“ITR-1 could be used by individuals earning only rental income with one house property and having income up to Rs 50 lakhs, with fewer complexities. While ITR-2 can be used if the conditions for ITR-1 aren’t met,” said Deepashree Shetty.
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What are the consequences of not reporting rental income despite being liable to file an ITR?
Failure to report rental income can lead to penalties, interest levies and potential scrutiny by tax authorities. Timely and accurate disclosure is critical to avoid litigation and financial cost.
Disclaimer: This article is for informational purposes only and does not constitute professional tax advice. Tax laws and regimes are subject to frequent changes by the government. Readers should verify details with official Income Tax Department notifications or consult a Chartered Accountant before making any financial decisions.
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This article was first uploaded on June nineteen, twenty twenty-six, at twenty-three minutes past five in the evening.
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