India: Worked Example of Tax on Rent
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Tax Example: Rent
| Non-resident couple's joint monthly rental income1 | US$1,500 | US$6,000 | US$12,000 | |
| Annual Rental Income | 18,000 | 72,000 | 144,000 | |
| Less Municipal Taxes2 | (478) | (2,226) | (4,515) | |
| Less Costs (30%)3 | (5,257) | (20,932) | (41,846) | |
| = Taxable Income | 12,265 | 48,842 | 97,640 | |
| Income Tax Rates4 | ||||
| Up to INR100,000 | nil | - | - | - |
| INR100,000 – INR150,000 | 10% | 142 | 142 | 142 |
| INR150,000 – INR250,000 | 20% | 870 | 870 | 870 |
| Over INR250,000 | 30% | 419 | 11,392 | 26,031 |
| = Income Tax Due | US$1,431 | US$12,404 | US$27,043 | |
| Additional Taxes | ||||
| Surcharge5 | 10% | - | 1,240 | 2,704 |
| Education cess6 | 2% | 29 | 273 | 595 |
| Annual Income Tax Due | US$1,460 | US$13,917 | US$30,342 | |
| Tax Due as % of Gross Income | 8.11% | 19.33% | 21.07% | |
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DISCLAIMER: The information contained above is marketing material only and is not written tax advice directed at the particular facts and circumstances of any person and should not be relied upon. We encourage you to discuss your particular situation with us or an independent tax advisor. This information was last updated on Nov 15, 2006.
Notes
Grant Thornton India is a member firm of Grant Thornton International. Grant Thornton International is not a worldwide partnership. Member firms of the international organization are independently owned and operated.
1 The property is jointly owned by husband and wife, but then taxed separately (50% upon each partner). Exchange rate used: US$1 = INR46.
2 Estimated values only.
3 The 30% deduction is applicable to the annual rent arrived at after deducting the municipal property taxes. This standard deduction covers the repairs and maintenance costs.
4 The tax bands used for the computation of the wife’s income are as follows:
Up to INR135,000 (0%)
INR135,000 – INR150,000 (10%)
INR150,000 – INR250,000 (20%)
Over INR250,000 (30%)
5 This is applicable only in cases where income exceeds INR1,000,000 (US$21,739).
6 All taxpayers are liable for the education cess levied on the income tax liability at 2%.
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