How is income from house property taxed in India for NRIs or non-resident Indians? Are there any distinct regulations that NRIs must adhere to, and what is the procedure for calculating taxable income from house property for NRIs?
There are no separate rules for taxation of house property in India for residents and non-residents. Taxation rules are the same for both type of residency status. Rental income from the property situated in India is taxable in the hands of the owner of the house property, whether it is for an NRI or a resident Indian. The method of computing taxable rental income is prescribed under the income tax law as follows:
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Gross annual value (GAV) less municipal taxes actually paid gives the net annual value (NAV). Reduce the standard deduction of 30% of NAV and interest on housing loan from it, which will then be the taxable rental income.
GAV is higher of the following: (i) Amount at which the property might reasonably be expected to be let out; or (ii) Actual rent receivable.
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In other words, GAV compares the actual rent received or receivable with expected rent that the property could fetch.
If there is loss under the head income from a house property from let out property due to interest expenditure on housing loan being higher than the NAV less 30% standard deduction, such loss can be set off against the income under other heads of income only to the extent of ₹200,000 and balance can be carried forward up to eight years for the set off against future income from a house property.
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Also, repayment of principal amount against housing loan taken from eligible lenders for acquiring a property is eligible for deduction under Section 80C (limit ₹150,000). But this deduction is not available if the individual opts for the benefit of lower tax rate under the new tax regime under Section 115BAC.
Also, any loss incurred on income from house property is not allowed to be set off against any other income and carried forward under the new tax regime.
