Budget 2020 suggestions: ASSOCHAM has recommended that a flat 10 per cent should be levied on rental income of house properties in Union Budget 2020.
Budget 2020 expectations: Budget 2020 boost for house owners with rental income? Finance Minister Nirmala Sitharaman must provide income tax incentives for rental housing to meet Modi government’s commitment of “Housing For All by 2022”, ASSOCHAM has suggested. With the central government focusing on “Housing For All by 2022” mission, ‘Rental Housing’ requires a boost since several people in India cannot afford ownership housing, the Associated Chambers of Commerce and Industry of India has stated in its pre-Budget 2020 memorandum.
ASSOCHAM has recommended that a flat 10 per cent should be levied on rental income of house properties in Union Budget 2020. Apart from this, the deduction from rental income under Section 24(a) of the Income Tax Act should be increased from 30 per cent to 50 per cent. ASSOCHAM also suggested that the rental income in respect of housing units with up to 90 Sq. mt. of carpet area should be totally exempt from income tax in the upcoming India Budget 2020.
Currently, the computation of income from house property depends on property type, Gross Annual Value of the property, deduction for municipal taxes, the net annual value of the property, standard deduction, and interest on borrowed capital. According to the new ruling, if any individual owns more than two houses, both of these properties will be considered as self-occupied. However, any house other than that is treated as let-out.
How to calculate income from let-out house property
House owners earning from rent have to pay tax on the income. It must be noted that any house property of the assessee will be considered as a let out house property if that is given on rent to a tenant even for a few months. There are certain steps to calculate income tax on earnings from house property. First, you need to calculate the annual rental amount received as rent. After that, you need to deduct Municipal Taxes paid during the financial year to arrive at Net Annual Value (NAV). Finally, from NAV deduct Standard Deduction at 30 per cent of Net Annual Value and interest on housing loan, if any to ascertain the final value of the earnings from Let-out House Property.