Curbs on 2 self-occupied homes lifted in key tweak; Thresholds on TDS, TCS relaxed in major reprieve for salaried class, senior citizens

The Union Budget 2025-26, unveiled by finance minister Nirmala Sitharaman on Saturday, has proposed to lift restrictions on claiming two properties as self-occupied (SOP), streamlining the process for taxpayers.

- Jash Kriplani

NEW DELHI:

In the current tax regime, the taxpayer is allowed to declare two houses as SOPs and if he has taken housing loan on both the properties, he can use the interest outgo to declare losses (maximum loss in a financial year: ₹2 lakh), and set it off against other income.

The new rules will allow the taxpayer to do this with less compliance burden or fear of unnecessary scrutiny from the IT department.

The budget memorandum highlights an amendment to Section 23(2) of the Income Tax Act, which previously allowed owners to claim a property's annual value as nil only if they occupied it for personal residence or could not occupy it due to employment, business, or profession elsewhere. This provision often led to confusion, with taxpayers questioned by IT department on whether their reasons for not occupying property were valid.

Prakash Hegde, a Bengaluru-based chartered accountant, noted that taxpayers were often asked to prove they were staying in rented accommodation in another city due to work commitments, even if their properties remained vacant.

"With a view to simplifying the provisions, it is proposed to amend the sub-section (2) so as to provide 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," the memorandum read. Gautam Nayak, partner at CNK & Associates, welcomed the change, noting that it will reduce unnecessary litigation as to whether the conditions have been met or not.