The process of filing returns to get refund of tax deducted in the financial year 2020-21 has started. In this, exemption can be achieved through many options to save tax. This also includes the rent of the house. Salaried persons get benefits on the rent they pay for the house, but at the same time the landlord also gets benefits on it. The landlord will get the benefit of tax exemption, whether the rent is received from the HRA employee or from the non-HRA employee. However, it should be noted that both the landlord or the tenant, both get the benefit of tax deduction on the amount of rent only if they are filing returns as per the old tax slab.
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In this way the landlord gets tax relief on rent
According to investment and tax expert Balwant Jain, the landlord can claim a standard deduction of 30 per cent on the rent he receives. This relief is available in the form of maintenance expenses. However, for its calculation, municipal tax should be deducted in the amount of rent first, then a standard deduction of 30 per cent is made. The remaining 70 percent amount becomes tax liability. However, on this 70 percent amount, you can claim deduction of any interest attached to the house.
Apart from this, loss of up to Rs 2 lakh under the head ‘Income from property’ by the landlord can be adjusted against salary, business income or capital gains. According to Jain, if there is a loss of more than Rs 2 lakh, then it can be set off for the next eight years, but keep in mind that if it is set off by carrying forward, then it can be adjusted only with the income from house property. can do.
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Tax liability of the landlord on the month of rent
The financial year 2021-21 has been completely affected due to Corona and due to this the landlords have also been hit financially. Usually, the landlord has to pay tax on the rent for the whole year whether he has received the rent or not, but the income tax department used to levy tax on them. However, last year, the Mumbai Bench of the Income Tax Appellate Tribunal, while giving relief to the landlords, said that if the rent is not received, then the tax will not have to be paid, that is, if the rent has been received only for 8 months, then only tax will have to be paid on this amount and not For the whole year.
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Salaried gets tax relief on rent like this
If you work in a company, then a part of your salary is the House Rent Allowance (HRA). On this, tax relief is available up to a limit under section 10(13A) of income tax. In such a situation, if you live in a rented house or if you live in a parent’s house, then you can claim tax exemption on HRA. This deduction is HRA, 50 percent of basic salary and dearness allowance for people living in metro cities and 40 percent for non-metro cities or 10 percent of the basic salary from the rent amount and adding DA amount to that amount. Come, the amount which is the least of these three gets deducted.
It can be understood with an example that like you are living in a metro city like Delhi and your basic salary is 50 thousand rupees on which the company gives 20 thousand HRA. Now if your actual rent is Rs 15,000 per month, then the annual rent is Rs 1.8 lakh. Salary Rs 6 lakh per annum and HRA Rs 2.4 lakh per annum. In this case, the annual rent minus 10% of basic salary will be deducted as it is less than HRA. In this case, after deducting 60 thousand rupees from 1.80 lakh rupees, 1.2 lakh rupees are coming and you will be able to claim deduction on this.
(Note: The information given here is based on consultation with investment and tax experts and inputs from ClearTax. Consult a professional while claiming tax exemption.)