Rental Income

• Income from letting out of the property is assessed under the head "Income from house property" under normal Income Tax Rules
• If the property is let out as a business center, wherein the purpose is to provide a composite service of providing fully furnished infrastructure for commercial use, the income will be taxed as "Business income".
• Interest payable on borrowed capital for acquisition of property is deductible

Sale Proceeds
• Profit on sale of property is taxed as Capital Gains.
• If the property is held for more than 3 years (?) it is taxed as "long term capital gains" otherwise it is taxed as "short term capital gains".
• Capital gains would be computed as the difference between sale price and cost price (as inflated by the cost of indexation in case of long term capital gains) plus expenses on transfer (brokerage, stamp duty, etc).

For more detailed tax provisions please Click here >>