Finance Minister Nirmala Sitharaman began her eighth consecutive budget presentation on February 1, 2025, emphasizing the government’s sustained efforts to accelerate growth, secure inclusive development, and boost household sentiment. The budget speech, presented in Parliament at 11 a.m., aims to uplift India’s economic prospects while remaining fiscally disciplined.
In a major relief for property owners, the Union Budget 2025 now allows taxpayers to value two self-occupied properties at nil annual value, compared to the previous rule where only one property was considered tax-exempt under this provision. This change is expected to reduce the tax burden on middle-class families and promote homeownership.
What does the new rule mean?
Under the previous tax structure, taxpayers could only declare one self-occupied property as having nil annual value, while any additional property was considered deemed to be let out and taxed accordingly. With the updated provision, taxpayers owning two self-occupied homes will not be liable to pay tax on their notional rental income, thereby saving a significant amount.
Key benefits of the new provision:
- Lower taxable income: Homeowners will no longer have to declare notional rental income on their second property, reducing their overall tax liability.
- Encourages homeownership: The relief is expected to encourage families to invest in real estate and own multiple homes without being penalized under the current tax structure.
- Helps working professionals: For individuals working in different cities or owning a house for personal reasons such as elderly care, the provision offers much-needed flexibility.
Other tax reforms announced in Budget 2025:
- TCS limit on LRS remittances increased: The threshold for Tax Collected at Source (TCS) on remittances under the Liberalised Remittance Scheme has been increased from ₹7 lakh to ₹10 lakh.
- TCS exemption on education loans: Education loans up to ₹10 lakh from specified financial institutions will be exempted from TCS, benefiting students and their families.
- Rationalisation of TDS and TCS rates: The government will reduce the number of rates and thresholds for TDS and TCS, simplifying tax compliance for businesses and individuals.
- Extended timeline for filing updated tax returns: The time limit to file updated tax returns has been extended from 2 years to 4 years, providing taxpayers with more flexibility to correct past filings.
