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CS Executive · Tax Laws and Practice · Income under the Head House Property

Ms. Anita Rao owns a flat in Chennai and earns rent from letting it out. Under the Income-tax Act, 2025, under which head is this rent chargeable, assuming she does not run letting as a separate commercial activity of a business nature?

The rent is chargeable under Income from house property. The Act says income from letting out a residential house or part of it by its owner is not business income and is taxed only under the house property head.

  1. AIncome from house property, because letting of a residential house by the owner is chargeable only under this headCorrect
  2. BProfits and gains of business or profession, because rent is a regular receipt
  3. CIncome from other sources, because rent is a periodic receipt
  4. DCapital gains, because the flat is a capital asset

Explanation

Section 26(4) states that income from letting out a residential house or part of it by the owner is not included in business income and is chargeable only under Income from house property. Section 20(1) is the charging provision. The business head is therefore wrong for such rent.

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