If NRI earning rent is taxable ?


Very knowledgeable site. I need expert opinion on my 2 doubts. I am an NRI since last 10 years and have purchased a flat in a metrocity. Me and my hubby are co-owners of the flat and is free of any mortgage or home-loan. We will be letting it out since July 2011. I am expecting minimum rent Rs.50,000 approx monthly. I do not have any other source of income in India.

1) As per your calculation sheet, I will be expecting to earn Rs.4,50,000 annualy through rent and to pay Income Tax of Rs.12,875. Is it correct for NRI person like me.

2) I am thinking of purchasing one more flat (ready possession) taking 100% home-loan on the basis of first flat (without putting any of my share). My bank is willing to give me 100% loan. EMI of this loan is Rs.45000 approx monthly. If I let this flat out, I will be expecting rent of Rs.18,000 approx monthly. This will make my total income of Rs.68,000 monthly. As I will be taking home-loan, will I be entitle to get any tax benefits on the capital or interest part.

I am consulting this with my CA, but I am looking for second opinion as well. Good wishes.


asked May 04 '11 at 07:02 by drbharati 1112

Your will have to pay income tax on rental income like a resident Indian. 30% of rental income tax exempted towards house maintenance. So in-case you earn 6 lakhs from rent in a year, Only 4.2 lakhs will be taxable. Moreover you can further invest 1.20 lakhs under 80-C and 80-CCF to lower taxable amount to 3 lakhs only.

If home loan in taken then whole interest amount is exempted from Income tax. In case of a rented property, which is let out then there is no maximum limit on home loan interest exemption. Principal part of loan is exempted under section 80-C but upto a max limit of 1 lakh (combined all 80-C investments)

answered May 05 '11 at 06:39 by pankaj 5.2k320

Many many thanks Pankaj. Nicely explained complex matter in very simple way. Now I am getting, what my CA is telling.
(May 06 '11 at 08:10) drbharati
Can you let us know, what ITR needs to be filed in case of only "income from property" ?
(Jul 23 '13 at 15:20) Nitin Mathur
In case its a single house property income, ITR-1 can be filed by Indian residents, but for NRIs, ITR-1 cannot be used if having an asset (including financial interest in any entity) located outside India or signing authority in any account located outside India. So ITR-2 would be used for NRIs even for single house property income.
(Jul 24 '13 at 01:23) pankaj

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Asked: May 04 '11 at 07:02

Seen: 2,706 times

Last updated: Jul 24 '13 at 01:23