How Much Rent Income Is Tax Free in India

If you earn rent in India, this question shows up sooner or later.

How much rent income is tax free in India?

And am I about to lose a big chunk of it to tax?

Short answer.

Rent isn’t taxed the way most people think it is.

Let’s walk through it slowly. No jargon. No panic.

First things first: how rent is taxed

Rent you earn from a house or flat is counted as income from house property.

It gets added to your total income for the year.

Important part.

Rent is not taxed separately. It joins everything else you earn.

So whether your rent is tax free or not depends on:

• Your total income
• Deductions allowed
• The tax regime you choose

That’s the base rule.

The 30% deduction everyone gets

Before any tax calculation starts, the government gives landlords a break.

A flat 30% standard deduction on rent income.

No bills. No proof. No explanation needed.

This is meant for repairs, maintenance, wear and tear.

So whatever rent you earn:

• 30% is removed automatically
• Tax is calculated on the remaining 70%

This single step changes the math a lot.

Now the big question: ₹20 lakh rent in a year

This is where people usually panic.

So let’s do this properly.

Step 1: Apply standard deduction

Annual rent received: ₹20,00,000

Standard deduction (30%):

₹6,00,000

👉 Taxable rent income = ₹14,00,000

This ₹14 lakh is what gets taxed.

Not ₹20 lakh.

Old tax regime: how much tax?

Assume rent is your only income and you don’t claim any extra deductions.

Tax on ₹14 lakh under the old regime works like this:

• Some income is tax free
• Middle slabs are taxed at 5% and 20%
• Income above ₹10 lakh is taxed at 30%

After doing the full slab calculation and adding cess, the total tax comes to:

👉 Around ₹2.42 lakh

That’s the final number.

Not small. But also not outrageous.

New tax regime: how much tax?

Same rent. Same deduction.

Only the regime changes.

Under the new tax regime, slabs are more spread out and lighter for many people.

Tax on ₹14 lakh under the new regime comes to:

👉 Around ₹1.35 lakh (including cess)

That’s a saving of about ₹1 lakh compared to the old regime.

Same rent.

Different outcome.

Quick comparison (₹20 lakh rent)

• Taxable rent after deduction: ₹14 lakh
• Old regime tax: ~₹2.42 lakh
• New regime tax: ~₹1.35 lakh

For pure rental income, the new regime usually wins.

Things people often forget

• Rent is never taxed on the full amount
• 30% deduction applies every single time
• Regime choice matters more than rent size
• Rent alone doesn’t decide tax, total income does

FAQ

Is any rent income fully tax free?

Yes, if your total income after deductions stays below exemption limits.

Do I need proof for the 30% deduction?

No. It’s automatic.

Should landlords prefer the new regime?

In many rent-only cases, yes. But it depends on other income and deductions.

Final thought

Rental income sounds scary on paper.

In real life, once deductions and slabs kick in, it’s usually calmer.

Don’t assume.

Run the numbers once.

You might be paying far less tax than you think.