One of the best ways to save tax in India from rental income is by making use of the RTA (rental income tax) and the FRA (foreign income tax). It is better to work with these two separate taxes and not merge them to get the best of the deal. You can either opt for RTA and FRA separately or combine them to get better tax relief.
The main benefit of working with both the RTA and the FRA is that you will be able to make better use of your deductions. If you choose the RTA then you can claim up to 70% of your rental income as tax-free income. But the FRA will allow you to claim up to 25% of your rental income as tax-free income. The total tax-free amount will include all the tax-related expenses and capital gains of your rental income.
You can claim tax relief from your rental income by making use of both the RTA and the FRA. You can deduct a portion of your expenses towards your rental income by making use of your expenses and rental income tax. But if you decide to claim the entire expense against the income, then you can claim a tax relief by claiming an amount which is equal to the tax-free amount of your rental income.
If you are not able to deduct an amount against your rental income then you may have to make use of the income-tax reliefs. But you must make sure that the amount that you are claiming is not overclaimed. You should avoid claiming the tax reliefs which are more than the total amount that you are entitled to claim as tax-relief. If you are not sure of the exact amount that you can claim then you can ask the tax advisor of the rental company which you are using for your accommodation.
However, if you are using rental income from different places, then you can claim your expenses from the various places. For instance, you can claim your expenses incurred in renting accommodation in Chennai against your rental income in Mumbai. If you use your expenses for the same purpose in every place then the expenses incurred will not be a part of your income from rent.
It is better to work with both the RTA and FRA to get better tax relief from rental income. If you are not able to make use of the above-mentioned options then you can get relief from your rental income through other ways.