Rental income tax calculator for FY 2026-27: tax on rent under the old and new regimes
By Giridhar Reddy, founder of Domvio, Bengaluru
Published
Rent is taxed as income from house property. Take the rent you received, subtract the municipal tax you paid, then deduct 30% of what is left and your home loan interest. Add the result to your other income and pay tax at your slab rate. For FY 2026-27 the rules are sections 21 and 22 of the Income-tax Act, 2025.
This is general information, not tax advice. Tax rules change, and how they apply depends on your situation. It has not yet been reviewed by a chartered accountant. Have a chartered accountant (CA) check it for your situation before you use or rely on it.
Rental income tax calculator
Enter the rent you receive, the property tax you paid and your home loan interest. The calculator works out your income from house property and the tax for the year under both regimes, for FY 2026-27 (April 2026 to March 2027, called tax year 2026-27 in the new Act).
The calculator needs JavaScript. By hand: annual value = rent received in the year − municipal tax paid. Income from house property = annual value − 30% of annual value − home loan interest. Example: rent ₹25,000 a month for 12 months is ₹3,00,000. Less ₹6,000 municipal tax gives ₹2,94,000. Less 30% (₹88,200) and ₹1,50,000 interest leaves ₹55,800, which is added to your other income and taxed at your slab rate.
Not tax advice
This page and calculator are general information for resident individuals, checked against the sources linked here on 21 October 2026. The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. Confirm your figures with a chartered accountant before you file. Nothing you type leaves your phone or computer.
How is rental income taxed in India?
Rent from a flat, house or room you own is taxed under the head "Income from house property". You work it out in three steps, then add it to the rest of your income.
Find the annual value
For a let-out property, the annual value is the higher of the rent it could reasonably fetch and the rent you actually received (section 21(1)). Most owners use the rent received. Reduce it by municipal tax you actually paid during the year, whenever it fell due (section 21(3)). Rent you could not recover can be left out, under rules (section 21(4)).
Deduct 30% of the annual value
This standard deduction is a flat 30% for repairs and upkeep, whatever you actually spent (section 22(1)(a)). You don't need bills for it, and you can't claim repairs on top.
Deduct home loan interest
Interest on a loan taken to buy, build, repair or rebuild the property is deductible (section 22(1)(b)). Interest from before the year the house was bought or completed is claimed in five equal parts over five years (section 22(1)(c)). The principal repayment is not deducted here.
| Step | Amount |
|---|---|
| Rent received (₹25,000 × 12) | ₹3,00,000 |
| Less municipal tax paid | − ₹6,000 |
| Annual value | ₹2,94,000 |
| Less 30% standard deduction | − ₹88,200 |
| Less home loan interest | − ₹1,50,000 |
| Income from house property | ₹55,800 |
The ₹55,800 is added to your salary or other income. With ₹8 lakh of other income, total income is ₹8,55,800. Under the new regime that is below ₹12 lakh, so the rebate under section 156(2) brings the tax to nil. Under the old regime, for someone below 60, the tax is ₹83,660 plus 4% cess, or ₹87,006.
Is the 30% standard deduction and home loan interest allowed in the new regime?
The 30% deduction is allowed in both regimes. Home loan interest on a let-out property is also allowed in both. What changes is what happens when the result is a loss.
| Rule | New regime (default) | Old regime |
|---|---|---|
| 30% standard deduction on let-out property | Allowed | Allowed |
| Home loan interest on let-out property | Allowed, no cap | Allowed, no cap |
| Home loan interest on a house you live in | Not allowed (section 202(2)(a)(v)) | Up to ₹2,00,000 for one or two such houses together (section 22(2) and (5)) |
| Loss from house property against salary or other income | Not allowed, and the loss lapses (section 202(2)(b) and (3)) | Up to ₹2,00,000 a year (section 109(1)(b)) |
| Loss carried forward | No | Up to eight years, against house property income only (section 110) |
So if your loan interest is larger than your rent after the 30% deduction, the old regime can save tax: up to ₹2 lakh of the loss reduces your other income. In the new regime that loss is simply lost. The calculator shows both.
What are the tax slabs for FY 2026-27?
The new regime is the default. Its slabs are written into section 202(1) of the Act. The old regime slabs come from Part III of the First Schedule to the Finance Act, 2026. You choose the old regime with your return if you have no business income.
| Total income | Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
| Total income | Below 60 | 60 to 79 | 80 or more |
|---|---|---|---|
| Up to ₹2,50,000 | Nil | Nil | Nil |
| ₹2,50,001 to ₹3,00,000 | 5% | Nil | Nil |
| ₹3,00,001 to ₹5,00,000 | 5% | 5% | Nil |
| ₹5,00,001 to ₹10,00,000 | 20% | 20% | 20% |
| Above ₹10,00,000 | 30% | 30% | 30% |
- Rebate. A resident individual pays no tax up to ₹12 lakh of total income in the new regime (rebate up to ₹60,000, with marginal relief just above ₹12 lakh), and up to ₹5 lakh in the old regime (rebate up to ₹12,500), under section 156.
- Surcharge. Above ₹50 lakh of total income, surcharge of 10% is added to the tax, rising to 15% above ₹1 crore, 25% above ₹2 crore and 37% above ₹5 crore, with marginal relief (Finance Act, 2026, Paragraph F). The calculator caps it at 25% in the new regime.
- Cess. 4% Health and Education Cess on tax plus surcharge.
How do I report rental income in my ITR?
Rental income goes in the house property part of your income tax return (Schedule HP in ITR-2 and ITR-3). The form you use depends on what else you earn. This is the e-filing portal's list for returns filed in 2026 for FY 2025-26:
| Your situation | Form |
|---|---|
| Resident, total income up to ₹50 lakh, salary or pension, one house property, no loss to carry forward | ITR-1 (Sahaj) |
| Two or more house properties, a house property loss to carry forward, income above ₹50 lakh, or an NRI | ITR-2 |
| Any of the above plus business or professional income | ITR-3 (or ITR-4 for presumptive business income with one house property) |
Forms for FY 2026-27 are not out yet
The returns you file in 2027 for FY 2026-27 will be the first under the Income-tax Act, 2025. When we checked on 21 October 2026, the e-filing portal still showed the forms for AY 2026-27. Check the new forms before you file.
Collect a year of rent records
Rent received month by month, any months the flat was empty, and rent you could not recover. Rent receipts make this quick: use the rent receipt generator or keep the receipts your app sends.
Collect your deductions
Municipal tax receipts for tax actually paid in the year, and your lender's interest certificate for the year.
Check TDS in your AIS
If a tenant paid more than ₹50,000 a month, they should have deducted TDS (2% for most individual tenants). Log in to the e-filing portal and check your Annual Information Statement, then claim that TDS in your return. See TDS on rent above ₹50,000 a month.
Fill the house property details
For each property: the address, whether it is let out, your share if you own it jointly, the rent, municipal tax paid and interest. The return works out the 30% deduction from your figures.
Pick your regime and compare
Salaried people choose the old regime when they file; with business income you choose it by the due date and it carries forward. Use the calculator above to compare before you choose.
PG owners: house property or business?
If you run a PG with meals, cleaning and other services, the income may be business income rather than house property income, and the 30% deduction would not apply. How it is treated depends on what you provide. Ask your CA before you file. Our PG profit calculator helps you see the business side.
Every rent payment on record before tax time
Domvio reminds tenants on WhatsApp three days before rent is due, takes rent straight to your own UPI ID and sends an official PDF receipt to you and your tenant for every payment, UPI or cash. At tax time your year's rent is already in one list. It is free during early access. See how the rent collection app works.
Domvio sends a PDF receipt for every rent payment, UPI or cash, so the year's rent is on record. Reminders go out on WhatsApp with a UPI link to your own account. Free during early access.
Try Domvio freeFrequently asked questions
How much of my rental income is taxable?
Roughly 70% of the rent after municipal tax, minus home loan interest. The 30% standard deduction under section 22(1)(a) of the Income-tax Act, 2025 covers repairs and upkeep, so you don't claim them separately.
Is rental income taxable under the new tax regime?
Yes. Rent is added to your income in both regimes. In the new regime you still get the 30% deduction and interest on a let-out property, but a house property loss can't reduce your salary or other income.
Can I deduct property tax paid by my tenant?
No. Section 21(3) lets the owner deduct only municipal tax the owner actually paid during the year.
Is there a limit on home loan interest for a let-out flat?
Not on the deduction itself. The ₹2 lakh cap in section 22(2) is for a house you live in. But in the old regime only ₹2 lakh of a resulting loss can be set off against other income each year; the rest is carried forward for up to eight years.
Which ITR form should I use for rental income?
ITR-1 if you are resident, have one house property, total income up to ₹50 lakh and no loss to carry forward. Otherwise ITR-2, or ITR-3 if you also have business income. Check the forms for FY 2026-27 when they are released.
Does Domvio file my income tax return?
No. Domvio records rent payments and sends PDF receipts for each one, which you or your CA can use when filing. It does not give tax advice or file returns.
Stop chasing rent every month
Domvio reminds your tenants on WhatsApp, takes rent straight to your UPI ID and sends PDF receipts automatically. Free during early access.