Budget 2025: Major Tax Relief for Homeowners and Tenants with Self-Occupied Property and Higher TDS Exemption

Budget 2025: Major Tax Relief for Homeowners and Tenants with Self-Occupied Property and Higher TDS Exemption

Budget 2025: Major Tax Relief for Homeowners and Tenants with Self-Occupied Property and Higher TDS Exemption

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The Union Budget 2025 has introduced significant tax benefits aimed at reducing financial burdens for both homeowners and tenants. Key reforms include:

Two Self-Occupied Homes Now Tax-Free

Homeowners can now declare two self-occupied properties without incurring tax on notional rental income. Previously, only one property could be tax-exempt, while the second was deemed to generate rental income even if it was occupied by family members. This created an unnecessary tax liability.

For example, Mumbai-based Sakshi Mehta, who owns homes in Mumbai and Kolkata, previously had to pay tax on ₹4.8 lakh of notional rental income from his second home. Under the new provision, he is now exempt from this burden.

Real estate expert Anuj Puri, Chairman of ANAROCK Group, noted, “This move eliminates unnecessary taxation on second self-occupied homes, making homeownership more viable and encouraging real estate investment in smaller cities.”

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Higher TDS Exemption for Renters and Landlords

The budget has also increased the tax deduction at source (TDS) threshold for rent payments from ₹2.4 lakh to ₹6 lakh per year. This change benefits both tenants, who no longer have to deduct tax on rent payments below this limit, and landlords, who will receive their full rental income without TDS deductions.

For instance, Kolkata-based Anil Ghosh, who rents out his property for ₹40,000 per month, earlier faced a 10% TDS deduction, reducing his immediate cash flow. Now, with the new ₹6 lakh threshold, TDS deductions are eliminated, improving his financial liquidity.

According to Vimal Nadar, Senior Director at Colliers India, “This adjustment will ease compliance, increase disposable income for small landlords, and reduce the number of TDS transactions.”

Additional Taxpayer-Friendly Measures

Beyond housing, Budget 2025 introduces:

  • Extended Time for Updated Tax Returns: Taxpayers now have up to four years instead of two to revise their filings.
  • Higher TCS Exemption on Foreign Remittances: The threshold for tax collection at source (TCS) under the Liberalised Remittance Scheme (LRS) has increased from ₹7 lakh to ₹10 lakh, offering greater flexibility for individuals making international transactions.

Adhil Shetty, CEO of BankBazaar.com, emphasized that these tax reforms promote homeownership, ease financial stress on landlords and tenants, and streamline tax administration, enhancing overall economic efficiency.

#Budget2025, #TaxRelief, #Homeowners, #Tenants, #RealEstate, #TDSReforms, #FinancialEase

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