Landlords can still claim municipal taxes paid, the 30% standard deduction and loan interest on let-out properties under both regimes, but broader loss set-off rules may alter the overall calculation.
For Indian property owners who earn monthly rent, the tax rules are more straightforward than many assume. Business Today, speaking to tax expert Gauri Chadha, reported that rental income is computed in much the same way under both the old and new tax regimes, even though the newer system has narrowed some home-loan-related benefits elsewhere. That matters for landlords because the tax treatment of a let-out property can differ sharply from the rules that apply to a home used by the owner. The key question is not whether rent is taxable, but how the taxable amount is worked out.
The starting point is the actual rent received from the property. From that figure, municipal taxes can be deducted, but only if they have genuinely been paid, according to the Business Today discussion and tax guides on house-property income. In other words, a liability on paper is not enough; the payment has to have been made for the deduction to count in that year. After that, landlords are generally entitled to the 30% standard deduction that the tax code allows for repairs and maintenance, regardless of their actual outgoings. TaxClue’s guide on rental income notes that this standard deduction applies to the net annual value and is intended to give taxpayers a simple, fixed allowance instead of itemising every expense.
Borrowed money is another important piece of the calculation. For a property that has been bought to rent out, interest on the home loan can be claimed when computing house-property income, and the guides published by TaxClue and other tax explainers say that this remains available under both regimes for let-out properties. That is an important distinction from self-occupied homes, where the new regime is far less generous. Related analyses of the two systems also note that the newer regime restricts several house-property set-offs, including the ability to adjust losses against other income in the same way as under the old rules. For investors, that means the regime choice may still matter, but mostly because of the broader tax picture rather than the basic rent calculation itself.
The practical message for landlords is that buying property purely to save tax is usually a mistake. The tax relief can soften the blow of ownership, but it does not erase the real cost of the investment, including the purchase price, loan repayments, maintenance and the risk that rental yields may disappoint. The better approach is to compare the expected rent with the financing cost and the long-term return profile, while also checking how the old and new regimes affect the rest of the taxpayer’s income. As Business Today’s report makes clear, rental income is only one part of the decision; the wider economics of owning property matter just as much.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
