Income From House Property: New Income Tax Bill Explained

The new 2025 Income Tax Bill, which will be introduced soon, has some relaxations to the income tax chargeable from house properties. From financial year 2025-26 onwards, 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.”

The annual value of property consisting of any buildings or lands appurtenant thereto, owned by the assessee, shall be chargeable to income tax under the head “Income from house property.”

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What Is The Relief In The New Income Tax Bill?

The New Income Tax Bill 2025 helps taxpayers with two self-occupied flats or houses in calculating their income tax with relaxes. Previously, the annual value of a self-occupied property was taken as nil if it was occupied by the owner for his residence or if he could not reside in it because of business, profession, or employment.

As per the new rule, 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, hence relaxing the conditions.

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With this relaxation, the annual value of a self-occupied property can be taken as nil irrespective of whether it is occupied by the owner for his residence or if he cannot occupy it due to any reason.

The owners can now take the annual value as nil if they are not residing in the self-occupied property even without any reasons such as business, employment, or profession requirements.

What Are Incomes From House Properties?

The amount of arrears of rent received from a tenant or the unrealized rent realized subsequently from a tenant shall be deemed to be the income from house property in respect of the tax year in which such rent is received or realized. These amounts deemed to be income from house property shall be included in the total income of the assessee under the head “Income from house property,” whether the assessee is the owner of the property or not in that tax year.

What If Co-owned Properties?

For property co-owned with a definite and ascertainable share, the co-owners shall not be assessed as an association of persons, and their income computed separately as per their respective share under this Chapter shall be included in their total income.

Notably, the relaxation and the relief that 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, would also be applicable to the co-owners. The co-owner is individually entitled to the mentioned relaxation in the income tax.

Notably, the provisions of sub-section (1) shall not apply to such portions of the property as occupied by the assessee for his business or profession, the profits of which are chargeable to income tax.

Moreover, if a taxpayer has three properties, he or she can choose two out of the three houses for taking the annual value as nil as per section 23(2) of the Income-tax Act, 1961.

The annual value of any property shall be deemed to be the higher of the following: the sum for which it might reasonably be expected to let from year to year; or the actual rent received or receivable by the owner, if the property or any part of it is let.

In case the property or any part of it is let in the normal course and was vacant for the whole or any part of the tax year, the annual value of such property shall be computed as per the actual rent received or receivable by the owner.

In respect of a property or its part held as stock-in-trade and not let wholly or partly at any time during the tax year, the annual value shall be nil for two years from the end of the financial year in which the completion certificate is obtained from the competent authority.