Property owners stand to gain from several clarifications and corrections introduced in the revised Income Tax Bill, 2025, tabled by Finance Minister Nirmala Sitharaman in Parliament on Monday. 

The updated draft, replacing the earlier version withdrawn last week, incorporates key recommendations of the Parliamentary Select Committee led by BJP MP Baijayant Panda.

One of the most significant changes is in the valuation of house property. The term “in normal course” has been removed to avoid legal disputes, ensuring that taxation is based strictly on the higher of actual rent received or deemed rent.

Clearer valuation rules: Income from buildings and adjacent land will be taxed under “Income from house property” unless directly used for business.

Standard deduction certainty: A 30% standard deduction will be applied after municipal taxes are subtracted.

Pre-construction interest deduction: Now available not only for let-out properties but also for self-occupied homes, claimable in five equal instalments starting from the year of completion.

No tax on unrealised rent: Amounts not actually received from tenants won’t be counted for tax purposes.

These changes are expected to reduce disputes with the tax department and provide more predictable tax outcomes for landlords and homeowners.

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