How Is Rental Income From House Property Charged Under The Income Tax Regulation In India?

According to the Income Tax regulation in India, the rental income in the hands of the owner is charged to tax under ‘Income from house property’ rule. The rental income of a person other than the owner will not be charged by the government to tax. So, any rental income received by a tenant from sub-letting will not be charged to tax. This income will be taxable under the ‘Income from other sources’ rule, or profits and gains from business or profession.

Rule for a person who is not a registered owner of the property

The income tax regulation informs that, if a person receiving the rent is not the owner of the property, then rental income will not be charged to tax under the ‘Income from house property’, like rent received by a tenant from sub-letting.

Additionally, the official Income Tax guideline mentioned, the cases where a person may not be the registered owner of the property, but he will be treated as the owner (that is, deemed owner) of the property, and rental income from the property will be charged to tax in his hands. These cases have been mentioned below.

(1) In case, if an individual transfer his or her house property to his/her spouse (not being a transfer in connection with an agreement to live apart) or to his/her minor child (not being married daughter) without adequate consideration, then the transferor will be deemed as owner of the property.

(2) In case, the holder of the impartible estate is deemed as the owner of the property comprised in the estate

(3) In case, a member of a co-operative society, company, or other association of persons to whom a building (or part of it) is allotted or leased under the house building scheme of the society, company, or association, as the case may be, is treated as deemed owner of the property.

(4) In case, a person acquiring property by satisfying the conditions of section 53A of the Transfer of Property Act, will be treated as the deemed owner (although he may not be the registered owner). Under Section 53A of said Act the following conditions are, there must be an agreement in writing, the purchase consideration is paid or the purchaser is willing to pay it, and the purchaser has taken possession of the property in pursuance of the agreement.

(5) In the case of a lease of a property for a period exceeding 12 years (whether originally fixed or provision for extension exists), the lessee is deemed to be the owner of the property. However, any right by way of lease from month to month or for a period not exceeding one year is not covered by this provision.