The new proposal allows both properties to be valued as Nil, providing tax relief to middle-class homeowners and reducing their tax burden. The move aims to ease the financial strain on taxpayers who own multiple self-occupied homes.
The change will come into effect from April 1, 2025 and will apply to the assessment year 2025-26.
At present, the Income Tax Act lets taxpayers claim the annual value of self-occupied property as nil only under specific conditions, such as the taxpayer residing in the property or being unable to occupy it owing to job or professional reasons. The new rule will remove tax on any notional rental income from the second property.
Additionally, the FM also said that the annual limit of ₹2.40 lakh for TDS on rent is being increased to ₹6 lakh. “This will reduce, this will reduce the number of transactions liable to TDS, thus benefiting small tax payers receiving small payments”, she said.
Finance Minister Nirmala Sitharaman announced significant tax benefits in Budget 2025. The nil tax slab has been raised from ₹7 lakh to ₹12 lakh, providing major relief to taxpayers.
Industry and expert reactions
Neetu Vinayek, Partner and Tax Leader, EY India said, “Tax measures, such as extending tax relief for two self-occupied properties (currently restricted to one) and increasing monetary threshold for non-deduction of TDS on rent, are positive incentives for individuals and will boost middle-class spent in real estate investments.”
Vineet Nanda, Director Sales & Marketing, Krisumi Corp, said, “the provision allowing the ownership of two self-occupied properties without additional tax conditions is a forward-looking move that will encourage investment in second homes, enhancing the diversity and resilience of the housing sector.”
Sandeep Ahuja, CEO, Atmosphere Living, said, “The recent change in Budget 2025 allowing taxpayers to treat two properties as self-occupied significantly benefits individuals who own a holiday home or a second property for personal use. Previously, owning more than one property meant that the second property would be taxed on deemed rental income, even if it was not being rented out. This made owning a second home, such as a vacation property, less attractive due to the extra tax burden. However, with the new rule in Budget 2025, taxpayers can now classify both their primary residence and holiday home as self-occupied, exempting them from the tax on notional rental income for the second property.”
He further added, “This makes owning a second home for personal use more financially viable, offering relief to those who enjoy vacation homes or seasonal residences without facing additional taxes on properties they don’t rent out. As a result, this change encourages more people to invest in second properties for personal enjoyment without the concern of higher tax liabilities.”
FM Sitharaman presents her 8th record budget
Earlier, Finance Minister Nirmala Sitharaman on Saturday (February 1) presented her eighth consecutive budget amid sloganeering from opposition.
Sitharaman said the Budget aims to implement reforms across six domains – Taxation, Power, Urban Development, Mining, Financial Sector and Regulatory reforms.
Presenting the 14th consecutive Budget under the Narendra Modi government since 2014, Sitharaman said, “Together we embark on journey to unlock our potential for greater prosperity.” She asserted that the Indian economy is fastest-growing among all developing economies.