Finance Minister Nirmala Sitharaman on Tuesday presented the first general budget (Budget 2024) of Modi Government 3.0. In this, some announcements were made for every section. A new rule has also come in the budget for the landlords who give houses and flats on rent, on which they need to pay special attention.
The important provision in the budget for the people who earn by renting out the house (Rental House Income) is that now the income earned by renting out the house or flat will have to be declared as income from housing property while filing income tax (Income Tax Payers). Now it cannot be shown as business income.
While presenting the budget, Finance Minister Nirmala Sitharaman mentioned an important amendment in the Income Tax Act. In which it was clarified that the income earned from renting out residential property should be shown under “Income from house property” instead of income from business or any profession.
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Now you will not be able to save tax by showing wrong income
Currently, taxpayers show their rented house income as profit from business or profession in a wrong manner to reduce it. The Finance Minister had said that due to this their liability is getting reduced. This provision allows some property owners to show rent income as business income, so that deductions like maintenance cost, repairs and depreciation can be claimed. By misrepresenting the income in this manner, taxpayers reduce their taxable income significantly. Due to which they have to pay less tax.
Income from house is no longer business income
In her budget speech, Finance Minister Nirmala Sitharaman proposed that the central government will amend Section 28 to clear this situation. After which taxpayers will not be able to show income from rent as business income. Business or profession and house property will be payable under the income head. This new rule is likely to increase the tax liability of such people. The Finance Minister said that this amendment will be effective from April 1, 2025, next financial year. This new rule will prevent income tax payers from paying less tax in the name of wrong income.
