Filing an Income Tax Return (ITR) is a crucial financial responsibility for individuals earning income in India. If you are a salaried individual or pensioner and also earn rental income from a single house property, you can file your return using ITR-1 (Sahaj).
This comprehensive guide will explain who should use ITR-1, how to report rental income, claim deductions, and file the return online.
Who Should File ITR-1?
The ITR-1 (Sahaj) Form is for resident individuals whose total income does not exceed ₹50 lakh and consists of:
- Salary or Pension Income
- Income from One House Property (including rental income)
- Income from Other Sources (such as interest, dividends, etc.)
Who Cannot File ITR-1?
You cannot use ITR-1 if:
- You have more than one house property.
- Your total income exceeds ₹50 lakh.
- You have capital gains (from selling property, shares, etc.).
- You have income from business or profession.
- You are a Non-Resident Indian (NRI).
- You have foreign income or foreign assets.
How to Report Rental Income in ITR-1?
Rental income is categorized under “Income from House Property” in ITR-1. Here’s how to calculate and report it correctly:
Step 1: Determine Gross Rental Income
- If your house is rented out, the total rent received during the financial year is considered as Gross Annual Value (GAV).
- Example: If you receive ₹20,000 per month as rent, your GAV = ₹2,40,000 per year.
Step 2: Deduct Municipal Taxes Paid
- Property tax or municipal tax paid during the year can be deducted.
- Example: If ₹10,000 is paid as municipal tax, Net Annual Value (NAV) = ₹2,40,000 – ₹10,000 = ₹2,30,000.
Step 3: Claim 30% Standard Deduction (Section 24A)
- You can claim 30% of NAV as a deduction for maintenance and repairs.
- Standard Deduction = 30% of ₹2,30,000 = ₹69,000.
Step 4: Deduct Home Loan Interest (if applicable) (Section 24B)
- If you have a home loan, you can claim a deduction on interest paid (up to ₹2 lakh per year).
- Example: If you paid ₹1,80,000 as loan interest, you can deduct the full amount.
Step 5: Compute Taxable Rental Income
Net Taxable Income from House Property = NAV – Standard Deduction – Loan Interest Deduction.
DetailsAmount (₹)
Gross Annual Value (Rent Received) – 2,40,000
Less: Municipal Tax Paid – (10,000)
Net Annual Value (NAV) – 2,30,000
Less: Standard Deduction (30%) – (69,000)
Less: Home Loan Interest – (1,80,000)
Taxable Rental Income(-19,000) (Loss Carry Forward)
- If the final rental income is negative (loss), it can be set off against other taxable income (salary, etc.) up to ₹2 lakh per year.
- Any remaining loss can be carried forward for 8 years to adjust against future house property income.
Step-by-Step Guide to File ITR-1 Online
Step 1: Login to the Income Tax Portal
- Visit www.incometax.gov.in
- Click on ‘Login’ and enter your PAN, password, and captcha.
Step 2: Select the Assessment Year
- Choose the relevant Assessment Year (AY) (for income earned in FY 2023-24, the AY is 2024-25).
Step 3: Select ITR-1 (Sahaj) Form
- Click on ‘File Income Tax Return’ → Select ITR-1 (Sahaj).
Step 4: Enter Personal & Salary Details
- The portal may auto-fill details from Form 16 (for salaried individuals).
- Verify and update salary details if needed.
Step 5: Enter Rental Income Details
- Go to Income from House Property section.
- Enter Rental Income, Municipal Taxes, and Home Loan Interest (if applicable).
- The system will automatically calculate taxable income.
Step 6: Claim Deductions (80C, 80D, etc.)
- If eligible, enter deductions under Section 80C (LIC, PPF, ELSS, etc.), 80D (Health Insurance), etc.
Step 7: Verify Tax Calculation
- The system will compute total tax liability or refund.
- If tax is payable, pay via Net Banking, Debit Card, or UPI.
Step 8: Submit & Verify ITR
- Click on ‘Submit’ and e-verify using Aadhaar OTP, Digital Signature, or Net Banking.
- Download the ITR-V Acknowledgment for reference.
Tax Benefits & Deductions for Rental Income
1. Standard Deduction of 30% (Sec 24A)
1. Standard Deduction of 30% (Sec 24A)
- Allows 30% flat deduction on rental income irrespective of actual expenses.
2. Home Loan Interest Deduction (Sec 24B)
- Deduction up to ₹2 lakh for interest paid on a home loan for a rented house.
3. Set-Off & Carry Forward of Losses
- House property loss up to ₹2 lakh can be adjusted against salary income.
- Any remaining loss can be carried forward for 8 years.
4. Deductions Under Section 80C
- Claim up to ₹1.5 lakh deduction for investments like LIC, PPF, Tax-saving FDs, ELSS mutual funds.
5. Deduction for Senior Citizens (80TTB)
- Senior citizens can claim up to ₹50,000 deduction on interest earned from FDs and savings accounts.
Conclusion
Filing ITR-1 with rental income is straightforward if you maintain proper records of rental earnings, municipal tax payments, and home loan interest. Proper tax planning can help you reduce tax liability and maximize deductions.
Need Help with ITR Filing?
Contact CharteredHelp today! 📞 Call: 9870525656
📧 Email: info@charteredhelp.com
🌐 Website: www.charteredhelp.com
Ensure hassle-free ITR filing with expert assistance. Get in touch now!
