Rental income from house property situated in India is liable to income-tax in India. The method of computing taxable rental income is prescribed under the income-tax law as follows:
Gross annual value less municipal taxes give the net annual value (NAV). Reduce standard deduction of 30% of NAV and interest on housing loan from this, which will then be the taxable rental income.
Gross annual value is higher of the following:
(a) Amount at which the property might reasonably be expected to be let out; or
(b) Actual rent received or receivable.
In other words, gross annual value compares the actual rent received or receivable with expected rent that the property would fetch.
Also, any repayment of principal amount against housing loan taken for such property is also eligible for deduction under section 80C (maximum deduction under this section is Rs1.5 lakh).
In your case, rental income from house property situated in India will be taxable in India. The taxable rental income will be calculated as discussed above. However, assuming you qualify as non resident in India, if your total taxable income in India (including rental income or any other source of income) does not exceed the maximum amount not chargeable to tax (Rs2.5 lakh), you are not liable to pay tax and file income-tax return in India.
