Guide to Reporting Rental Income in ITR-1 Form

Resident individuals in India with a total income not exceeding Rs 50 lakh can utilize Form ITR-1 (Sahaj) for filing their income tax returns. This form covers income from salary, one house property, agricultural income up to Rs 5,000, and long-term capital gains under Section 112A (up to Rs 1.25 lakh).

If your income portfolio includes earnings from rent, you are eligible to file using ITR-1. This guide outlines the steps to correctly report rental earnings when submitting returns via ITR-1.

Personal Information Requirements

Ensure all personal details are accurate, including your full name, gender, date of birth, PAN, and father’s name. Additionally, provide current contact information such as your postal address, mobile number, and email ID.

Reporting Salary Income

Under the ‘Income Sources’ section, you must detail your salary earnings. Required information includes:

• Employer’s name and type
• Detailed salary breakup
• TDS deducted on salary
• Employer’s TAN

Alternatively, uploading a Form 16 PDF can automate the population of these salary details.

Reporting Other Income Sources

Include details regarding interest earnings, dividends, and any other income that does not fall under business, profession, or capital gains categories.

House Property Details

For Self-Occupied Properties:

Provide the following:
– Interest paid or payable on a housing loan.
– Interest paid during the pre-construction phase.
– The specific address of the house property.
– In cases of co-ownership, include the co-owner’s name, PAN, and percentage share.

For Rented Properties (Let-out):

Furnish these specific details:
– Annual rent received or receivable.
– Municipal taxes or house tax paid.
– Tenant’s name and PAN.
– Interest paid or payable on the housing loan.
– Pre-construction interest.
– Property address and co-ownership details, if applicable.
– Tenant’s TAN must be provided if TDS was deducted under Section 194-IB.

For Deemed Let-out Properties:

Mention the estimated annual rent receivable along with details similar to those required for a let-out property.

Understanding Tax Deductions

• Municipal Taxes: Deductible if paid by the owner.
• Co-ownership: Ensure Name, PAN, and share percentage are listed so you are taxed only on your portion.
• Home Loan Interest: Deduction allowed up to Rs 2 lakh.
• Section 80EEA: Additional deduction of Rs 1.5 lakh under Section 80EEA, subject to specific criteria.
• Standard Deduction: A flat 30% deduction on the Net Annual Value (Rental income minus municipal taxes) is allowed for maintenance.
• Exclusions: No separate deductions are permitted for expenses like painting, sweeping, or renovations.

Procedure to File ITR-1 with Rental Income

Step 1: Access the tax filing platform and initiate the filing process.

Step 2: Review pre-filled personal data such as name and address. Expand sections to verify accuracy and edit if necessary.

Step 3: Navigate to the ‘Income Source’ or ‘House Property’ section to add rental details.
– Enter the property address.
– Input co-ownership details (Name, PAN, share) if applicable.
– Provide Tenant details (Name, PAN/TAN, Aadhaar). Note that TAN is mandatory if the tenant deducted TDS under u/s 194-IB.
– Input the gross rental income and any property taxes paid.
– Enter housing loan interest, separating pre-construction and post-construction amounts.

Step 4: Complete other financial details, including salary, capital gains, dividends, and interest income. Specify deductions and taxes paid.

Step 5: Upload necessary documents and proceed to the tax summary. Review the comparison between tax regimes and finalize your choice.

Step 6: Select ‘File Tax’ to submit the return. Ensure you e-verify the return within 30 days of submission to prevent it from being treated as invalid.

Reporting Taxes Paid

Ensure the following tax payments are accurately recorded:
– TDS on salary
– TDS on non-salary income
– TDS on the sale of immovable property
– TCS collected
– Advance tax payments
– Self-assessment tax payments

Once all income and tax data is entered, proceed to e-file the return.

Frequently Asked Questions

Is income from a property outside India taxable?

Yes, if you are a resident of India, income generated from a property located abroad is taxable, regardless of whether the money is brought into India.

Where is rental income reported in ITR-1?

Rental earnings must be reported under the ‘Income from House Property’ head in the ITR-1 form.

How do Section 194I and 194IB differ regarding TDS?

Under Section 194I, individuals or HUFs not subject to tax audit are exempt from deducting TDS on rent, even if it exceeds Rs 50,000/month. Conversely, Section 194IB requires resident individuals or HUFs (not covered by 194I) to deduct TDS at 5% if rent exceeds Rs 50,000/month.

What applies if rent is paid to a Non-Resident?

Payments to an NRI require TDS deduction at 30% plus surcharge and cess, irrespective of the rent amount. There is no lower limit for this deduction unless the NRI provides a certificate for lower/nil deduction.

How can one claim a TDS refund on rent?

The landlord can claim a refund while filing their ITR after the tenant provides Form 16A for all quarters, proving TDS was deducted and deposited.

Can loss from house property be shown in ITR-1?

Yes, losses from house property can be set off against other income heads like Salary or Capital Gains in the same assessment year.

How can tax on rental income be reduced?

Tax liability can be lowered by deducting municipal taxes, applying the 30% standard deduction under Section 24(a), and claiming interest on home loans under Section 24(b).

Are maintenance fees deductible?

Actual maintenance expenses are not separately deductible. Instead, a flat 30% standard deduction on the net annual value covers all repair and maintenance costs.

How can TDS on rental income be avoided?

Landlords can avoid TDS if the monthly rent is below Rs 50,000. Additionally, submitting Form 15G or 15H can prevent TDS deduction if the total taxable income is below the exemption limit.

Is ITR-1 valid for those with Capital Gains?

Yes, starting from AY 2025-26, taxpayers can report Long Term Capital Gains (LTCG) under Section 112A in ITR-1 if the total LTCG is under Rs 1.25 lakh and there are no carry-forward losses.