Income Tax Returns for Individuals in Telangana: Professional Tax, Property and Local Points

Personal income tax is the same across India, but several items in a Telangana resident's return come from state and local payments. This guide covers the points that most often matter for individuals in Telangana.

Note: this article covers the rules for FY 2025-26 under the Income-tax Act, 1961. The Income-tax Act, 2025 applies from tax year 2026-27, with renumbered provisions and some changes, so check the current position for later years.

Professional Tax on Salary

Salaried employees in Telangana have Professional Tax deducted by their employer, capped at ₹2,500 a year. It's deductible from salary income under the old regime, but not under the new regime, where the standard deduction replaces most salary deductions.

Rental Income and GHMC Property Tax

If you let out a house or flat in Hyderabad or elsewhere in Telangana, municipal property tax you've actually paid to GHMC or the local body during the year can be deducted from the rent, before the 30% standard deduction on house property income.

Agricultural Income

Many Telangana families own agricultural land. Agricultural income is exempt from income tax, but if you also have other income above the basic limit, agricultural income above ₹5,000 is taken into account to work out the rate on your other income. It must be reported in the return.

Selling Property in Telangana

Hyderabad's property market means many residents sell land or flats. Key points:

• If the value adopted for stamp duty by the Telangana Registration and Stamps Department is higher than the sale price, beyond a tolerance, the higher value can be treated as the sale price.
• For land or buildings acquired before 23 July 2024, individuals can choose between 12.5% without indexation and 20% with indexation.
• Reinvesting in a residential house or specified bonds can exempt long-term gains, within limits and deadlines.
• Rural agricultural land outside the specified distances from municipal limits isn't a capital asset, so its sale isn't subject to capital gains tax.

Foreign Income and RSUs

Hyderabad's large technology workforce often holds RSUs or shares in foreign parent companies. Residents must report foreign assets in Schedule FA and foreign income in the return, even if no tax is due on them in a particular year.

A Checklist for Telangana Residents

1. Claim Professional Tax only if filing under the old regime.
2. Deduct property tax paid on let-out property.
3. Report agricultural income.
4. Compute property gains on the stamp duty value where it's higher.
5. Report foreign RSUs and accounts in Schedule FA.

Getting Help

Think Filing files returns for individuals across Telangana, including property sales, agricultural income and foreign assets.