The Income Tax Act defines "income from house property" as income earned by renting out a commercial property. This income is taxable and needs to be reported in your income tax return.
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Calculation of Income
To calculate the taxable income from a commercial property, you need to determine the Annual Value of the property. The Annual Value is the potential rent that could be earned from the property, and it is either the actual rent received or the fair rental value, whichever is higher. From the Annual Value, you can claim deductions for property taxes paid and a standard deduction of 30% of the net Annual Value to arrive at the taxable income.
Tax Rates
The taxable income from the commercial property is subject to income tax at the applicable slab rates as per the income tax brackets. The tax rates vary based on your total income and the applicable slab rates for the financial year.
Maintenance Charges and Other Expenses
If you incur expenses for the maintenance, repair, or renovation of the commercial property, they can be claimed as deductions from the taxable income. However, it is essential to maintain proper records and invoices for these expenses to support your claims.
GST Implications
If your rental income from the commercial property exceeds the threshold limit for Goods and Services Tax (GST) registration, you may need to register for GST and comply with the associated requirements.
TDS Obligations
If the annual rent from the commercial property exceeds a specified threshold, you may be required to deduct Tax Deducted at Source (TDS) before making the payment to the landlord. As a first-time filer, it is important to be aware of these TDS obligations and comply with the applicable rules and regulations.
It can be quite profitable to rent out commercial real estate, but it's important to understand the tax impacts. As a first-time tax filer in India, it is crucial to report your rental income correctly, claim eligible deductions, and fulfill any TDS obligations.
Look up more articles here for a smooth first time tax-filing process. All the best!
