New Rule: Landlords to Pay Tax Only on Net Rental Income

Aug 18, 2025 - The new Income Tax law has brought significant relief for landlords. Now, tax will not be levied on the entire rental amount, but only on the Net Annual Value after deducting municipal taxes.

For example, if the annual rent of a property is Rs 5 lakh and Rs 50,000 is paid as municipal tax, then tax will be applied only on the net rent of Rs 4.5 lakh.

Additionally, provisions for 30% standard deduction, home loan interest and pre-construction interest have also been included for tax exemption. This will provide major income tax relief to those renting out properties in urban areas.

The government has also clarified that a 30% standard deduction will be available on the net rent. This means that 30% of the net rental amount will be directly deducted, thereby reducing the taxable income even further. This deduction is provided considering expenses like property maintenance, repairs and other related costs.

Source: Media Reports

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