Budget 2024-25: Income From Letting Out Of House Property Taxable Under “Income From House Property”

The Union Finance Minister Nirmala Sitharaman presented the Union Budget in Parliament.

The provisions of Finance Bill, 2024 relating to direct taxes seek to amend the Income-tax Act, 1961 to continue reforms in the direct tax system through tax reliefs, removing difficulties faced by taxpayers and rationalisation of various provisions.

Section 28 of the Act specifies kinds of income that shall be chargeable to income-tax under the head 'Profits and gains of business or profession'.

It has been observed that some taxpayers are reporting their rental income generated by letting out of the house property, under the head 'Profits and gains of business or profession' in place of the head 'Income from house property'. The taxpayers are reducing their tax liability substantially by showing house property income under the wrong head of income.

The Union Finance Minister has proposed to amend the section 28 so as to clarify that any income from letting out of a residential house or a part of the house by the owner shall not be chargeable under the head “Profits and gains of business or profession” and shall be chargeable under the head “Income from house property”.