Budget 2025: Tax Relief On Second Property For Homeowners

Homeowners have been given fresh benefits in the Union Budget 2025 by Finance Minister Nirmala Sithraraman after it proposed to exempt tax on a second house if it is self-occupied.

Taxpayers will be able to claim nil valuation for two self-occupied houses instead of one allowed previously.

The budget proposes to amend Section 23 sub-section (2) of the Income-tax Act. It now says: "The annual value of the property consisting of a house or any part thereof shall be taken as nil, if the owner occupies it for his own residence or cannot actually occupy it due to any reason.”.

This will ease compliance burden on homeowners.

The government has also proposed increasing the annual threshold for Tax Deduction at Source (TDS) on rent from the current Rs 2.4 lakh to Rs 6 lakh, that can benefit small taxpayers and landlords.

"I propose to rationalise Tax Deduction at Source (TDS) by reducing the number of rates and thresholds above which TDS is deducted. Further, threshold amounts for tax deduction will be increased for better clarity and uniformity," Finance Minister Nirmala Sitharaman said in her Budget speech.

This will reduce the number of transactions liable to TDS, thus benefitting small taxpayers receiving small payments, the finance minister added.

The TDS limit on rent has been hiked from Rs 24,000 per month to Rs 50,000. This could extrapolate to 6 lakh per annum.