Budget 2025: No Tax on Rental Income Up to ₹20 Lakh
Under the Union Budget 2025, much of the tax burden on rental income has been eased for those who own property. Another important point is that you can earn up to ₹20 lakh in rental income without being taxed. It provides an overview of this law and offers advice to property owners on how to benefit from it.
Learning about the Tax-Free Rental Income Provision
From next year, people will only have to pay income tax on their earnings over ₹12 lakh. The rental exemption is also made better by allowing a 30% tax deduction on all rent income, covered by Section 24(a). Property owners can claim a tax deduction of up to ₹2 lakh for house loan interest expenses.
If a person gets ₹20 lakh in rental income, they can claim the following deductions.
- Gross Rental Income: 20,00,000
- You can deduct a standard amount of ₹6,00,000.
- Net Rental Income: Rupees 14,00,000
- Interest on home loan can be deducted up to ₹2,00,000.
- The income received from rental properties is taxed at ₹12,00,000.
If the rental income is ₹12 lakh, the individual is entitled to a full rebate as per Section 87A which means they will not have to pay any taxes.
Here are some main aspects of the Budget 2025 on rental income.
A higher threshold for TDS has applied to rent: Before, the TDS limit on rental income was ₹2.4 lakh, but now it is ₹6 lakh per year. This implies that landlords and tenants have to meet fewer regulations.
Section 87A exempts rental income from taxation for individuals earning less than ₹12 lakh in total.ve to comply with fewer requirements .
Under Section 87A, rental income is tax-free if the total annual income is below ₹12 lakh.
Property owners are entitled to take a 30% deduction on their rent income and an additional ₹2 lakh in deduction on home loan interest which helps them reduce the amount on which tax is levied
Suggestions for Reducing Taxes for Property Owners
Taking these approaches can help property owners enjoy the full benefits of these provisions:
- Organize All Paperwork: Keep every document you sign related to the property for future claims of deductions.
- Take advantage of the new tax system: Because the exemptions and rebates are greater, the new system is more suitable for landlords.
- Work with a tax professional to discover more options for lowering your taxes, as well as to comply with all the regulations.
Conclusion
Thanks to Budget 2025, property owners are enjoying significant tax breaks on their rental earnings. If people make use of the proper deductions and rebates, they can earn as much as ₹20 lakh in rental money free from being taxed. It benefits property owners by increasing their personal funds and stimulates investment in real estate, helping the economy grow too.
