Rental income v/s expenses.

This query is : Resolved

AMAN AGARWAL (Querist)
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27 January 2016 Hello friends, as rental income is exempt up to 30% u/s 24b in the hands of owner(whether earning business income or not). but on the other hand, rent is allow as deduction only in case of assessee earning business income. strange no benefit to salaried employee who take room on rent and paid dues on timely basis, but does not get any deduction of rent in his salary income. And at the same room owner pay tax only 70% rent received from salaried employee besides claiming all the benefits as available to employee. plz guide me.

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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27 January 2016 iNCOME FROM HOUSE PROPERTY-Standard Deduction – Standard Deduction is 30% of the Net Annual Value calculated above. This 30% deduction is allowed even when your actual expenditure on the property is higher or lower. Therefore this deduction is irrespective of the actual expenditure you may have incurred on insurance, repairs, electricity, water supply etc. For a self occupied house property, since the Annual Value is Nil, the standard deduction is also 0 on such a property.

Salary Employee get benefit if he is in rented premises , should have hra compnent in Salary he will get deduction u/s 10(13A)

AMAN AGARWAL

AMAN AGARWAL (Querist)
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09 February 2016 Thanks sir, but my query is for such employee who didn't get any hra from employer and have to paid rent for his rental premises. and didn't own any property in india in his own name.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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21 July 2025 Great question! Let me break it down clearly:

1. Rental Income & Owner’s Tax Benefit (Section 24(b))
If you own a property and rent it out, the rent you receive is taxable under Income from House Property.

You get a standard deduction of 30% on Net Annual Value (rent received minus municipal taxes) under Section 24(a) — this is meant to cover expenses like repairs, maintenance, etc., regardless of actual expenditure.

Additionally, if you have taken a loan to purchase or construct the property, interest paid on that loan is allowed as a deduction under Section 24(b) (subject to limits).

So, the owner pays tax on 70% of the rent received (approx.), not 100%.

2. Tenant’s Position (Salaried Employee Paying Rent)
If the employee receives House Rent Allowance (HRA) as part of salary, they can claim exemption under Section 10(13A) for rent paid.

But if no HRA is received, no deduction is allowed on rent paid under salary income.

There is no general deduction on rent paid by a salaried person without HRA.

The fact that the tenant does not own any property in their name does not entitle them to any deduction on rent paid, unless HRA or other special provisions apply.

3. Why this difference?
Tax law provides benefit to property owners to encourage investment.

For tenants (without HRA), rent paid is a personal expense, not deductible.

HRA exemption is a specific relief for salaried employees receiving HRA.

There is no parallel benefit for tenants paying rent out of pocket without HRA.

4. Summary Table
Scenario Tax Benefit
Owner receiving rent Taxable income with 30% standard deduction; interest on loan deductible
Salaried employee receiving HRA Can claim exemption on rent paid under Section 10(13A)
Salaried employee without HRA No deduction for rent paid, even if no property owned
Tenant (non-salaried) paying rent No deduction available under Income Tax laws

5. Possible Solution for Tenant without HRA
If your employer does not provide HRA, you can request HRA inclusion in salary.

Alternatively, some allowances like Rent-Free Accommodation or Conveyance Allowance might apply, but these are employer-dependent.

Otherwise, rent paid is not deductible.

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