In this article, we have discussed the new tax regime that allows you to set zero tax liability if you earn up to 10 lakhs from rental income.
Under the new tax regime the tax-free income limit– The latest tax regime has been incorporated in India which allows people to optimize their tax savings with ease.
One of the major things of the same regime would be that the salaried person who has an income of up to Rs 7.5 lakh, can claim the deductions to enjoy zero tax liability and for those who have only a rental income, of Rs 10 lakh the same tax-free income limit might get surged.
In Budget 2023, FM Nirmala Sitharaman has declared the revisions in the new income tax regime, and drawn the attention of the assessee who does not have the investments and the exemptions to claim.
In the budget, the new tax slab directed that anyone having an income of up to Rs 7.5 lakh shall secure zero tax liability however the limit could get surged to Rs 10 lakh for the people having the rental income. In this, we shall learn the provision of the new tax regime and the method which the people can choose to minimise their tax liability through leveraging the same-
What Way the Salaried Assessee Can Pay Zero Tax on Income of Rs 7.5 lakh
The amendment in the new tax regime in the Budget FY23 directed that any salaried person who has an income of up to Rs 7.5 lakh shall not be required to pay the income tax via complying with the mentioned below procedure-
When the individual makes up to Rs 7.5 lakh and goes with the new income tax regime, the initial thing is that they are then able to claim for the standard deduction of Rs 50,000 which shall be applied to the salaried assessees drawing the taxable income lowered to Rs 7 lakh.
For the Rs 3 lakh slab, there would be a zero tax for the next Rs 3 lakh in the slot between Rs 3 lakh to Rs 6 lakh income the person having an income of Rs 15000 is required to pay 5% income tax.
A 10% tax would be required to get paid for the remaining Rs 1 lakh income between Rs 6 lakh and Rs 7 lakh, which arrives up to Rs 10,000.
The total tax liability comes up to Rs 25,000 while adding Rs 15000 and Rs 10,000 together.
Under section 87A a rebate of Rs 25000 can be claimed by the salaried employees which draws their tax liability to zero.
What is the Method to Pay Zero Tax on Rental Income up to Rs 10 Lakh?
According to tax experts, a person can get rental income up to Rs 10 lakh without incurring any tax obligations if they have only rental income and no other sources of income or deductions. This is how it can be done:
Read Also: Zero Tax on INR 10 Lakhs Personal Income, Know the Full Way
Except for exemptions for particular expenses, rental income from residential property is taxed. These costs include the house’s property tax as well as the loan interest. Additionally, the tax code permits a standard deduction of 30% on the net yearly value for repairs and maintenance of the aforementioned property.
The standard deduction amount would be up to Rs 3 lakhs If we deemed a 30% standard deduction for the case when the landlord receives a total income of Rs 10 lakh as rent. If the same deduction for the particular expenditure would get subtracted from Rs 10 lakh collected as rent then the same draws down to Rs 7 lakh which would be free from tax for the non-salaried assessees beneath the new tax regime.
Therefore, the landlord in this instance, whose only source of income is rent, won’t be required to pay any taxes.
In addition, it is always a good idea to weigh your alternatives, compare the tax savings between the two tax systems, and think about investing in tax-saving tools to further lower your tax bill. You may save a lot of money on taxes by implementing these tactics.
