A Bengaluru-based chartered accountant has sparked interest online after explaining how an individual earning ₹17 lakh annually through rent could legally end up paying zero income tax under specific conditions.

Meenal Goel highlighted that the benefit comes through existing deductions and rebates under India’s tax system, rather than any loophole.

How rental income is taxed

Income earned from renting out property is taxed under the category “Income from House Property”.

Under Section 24(a) of the Income Tax Act, taxpayers are entitled to a standard deduction of 30 percent on gross rental income without needing to submit bills or expense proof.

For annual rent of ₹17 lakh, this deduction reduces the taxable income to ₹11.9 lakh.

How tax can become zero

Under the new tax regime for the 2025–26 assessment cycle, the tax payable on ₹11.9 lakh may be offset through available rebates such as Section 87A, depending on final taxable eligibility and applicable rules.

If all conditions are satisfied, the net tax liability can reduce substantially, and in some cases may become nil.

Important conditions apply

Experts caution that this outcome is not automatic for everyone.

The taxpayer may need rental income as the primary source of earnings. Additional salary, business or other income could increase total taxable income beyond rebate limits.

The taxpayer must also opt for the new tax regime if claiming benefits structured under that system.

Accurate ownership records, rent agreements and declared income details are essential.

Not a loophole

Tax professionals say this is not misuse of law, but an example of legal tax planning through available deductions and rebates.

Many property owners are unaware of provisions that can significantly reduce tax liability when used correctly.

Consult a tax expert

Since tax slabs and rebate rules may change annually, individuals are advised to consult qualified professionals before filing returns or relying on generic examples.

The discussion has once again shown that awareness can be as valuable as income.