Building tax payment deduction in rental Income

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Landlords can claim building tax deductions against their rental income in the financial year they actually pay the tax, not necessarily the period it covers. However, any penal interest incurred on late payments cannot be claimed as a tax deduction because it is considered a penalty, not a municipal tax.

binu sukumaran

binu sukumaran (Querist)
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15 July 2026 Sir,
one of landlord pay local board building tax on 15.07.2026 for 25-26 payment . He also incurred Penal interest for that
1. which year he can claim deduction form his rental income
2. can he claim Penal interest also.
Please advise
With regards
Binu

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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16 July 2026 The landlord can claim the building tax deduction only in the Financial Year 2026-27 (the year of actual payment), regardless of the period the tax covers. However, the penal interest cannot be claimed as a deduction under any circumstances, as penalties do not qualify as municipal taxes.

binu sukumaran

binu sukumaran (Querist)
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16 July 2026 Sir.
Thanks for your valuable information

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