The Union Budget 2024, which Finance Minister Nirmala Sitharaman presented on Tuesday, has plugged a gap wherein taxpayers could declare rental income from letting out of a house property under profits and gains from business heads of income. The move also aims to widen and deepen the tax base.
Now, under the proposed changes, rental income from letting out a residential house property can be offered for tax under income only.
Reacting to the changes in tax from income from house property, Deepak Shenoy, the founder and CEO of Capitalmind said on X (formerly known as Twitter), “Some people were putting rental income from house as income from business. They could then offset that with "business expenses".
“Now… you have to record that as income from house property (where a flat 30% expense is ok, rest is taxed), ” Shenoy added.
“It is proposed that income from letting out of a house or part of the house by the owner, shall not be charged under the head ‘profits and gains of business or profession’ and will be chargeable to tax under the head ‘income from house property’ only” Finance Minister said.
So, one can claim only the specified deductions under the house property heads of income. As a direct result of this, now tax payable from rental income of let out house property will increase if the house owner was previously declaring house property rental income under the PGBP heads of income.
To deepening the tax base, the finance minister also proposed to increase the Security Transactions Tax on futures and options of securities to 0.02 per cent and 0.1 per cent respectively. The finance minister also proposed to tax income received on buy back of shares in the hands of the recipient.
