
Taxpayers must show home rent income under 'income from house property' in IT returns: Govt
The Hindu
Finance bill 2024 clarifies rental income to be taxed under 'income from house property' for individual taxpayers.
All rental income of individual taxpayers from residential properties will be charged under the head 'income from house property' and not as income from business or profession, according to the Budget document.
The clarification has been introduced in the finance bill 2024 as several individuals were showing rental incomes under the 'profits and gains of business or profession' to reduce tax liabilities.
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"It is proposed that income from letting out of a house or part of the house by the owner, shall not be charged under the head 'profits and gains of business or profession' and will be chargeable to tax under the head 'income from house property’ only," Finance Minister Nirmala Sitharaman in her budget speech.
Elaborating in the Budget document, the government mentioned that Section 28 of the Act specifies kinds of income that shall be chargeable to income tax under the head 'Profits and gains of business or profession'.
"It has been observed that some taxpayers are reporting their rental income generated by letting out of the house property, under the head 'Profits and gains of business or profession' in place of the head 'Income from house property’.
"Accordingly, they are reducing their tax liability substantially by showing house property income under the wrong head of income," it said.