**No Tax on ₹20 Lakh Rent in Budget 2025 – Here’s How!**
Budget 2025 has introduced significant changes in the new tax regime, making rental income more tax-efficient than ever. With the increased tax-free limit of ₹12 lakh, higher TDS thresholds, and deductions available under Section 24(b), individuals earning rental income can pay zero tax on annual earnings of up to ₹20 lakh.
New Tax Regime (Budget 2025) – Latest Slabs
The new tax regime (Section 115BAC) has been modified in Budget 2025. Below are the latest slab rates:
| Slab (Total Income ₹) | New Tax Rate (%) |
|---|---|
| 0 – 4,00,000 | 0% |
| 4,00,001 – 8,00,000 | 5% |
| 8,00,001 – 12,00,000 | 10% |
| 12,00,001 – 16,00,000 | 15% |
| 16,00,001 – 20,00,000 | 20% |
| 20,00,001 – 24,00,000 | 25% |
| Above 24,00,000 | 30% |
🔹 Maximum rebate available: ₹60,000 (Applicable for income up to ₹12 lakh).
🔹 No rebate under Section 87A on special rate income like capital gains, lottery, betting, etc.
Tax Deductions on Rental Income Under Section 24(b)
1️⃣ Standard Deduction (30%) – Available for all rental income.
2️⃣ Home Loan Interest Deduction (without any limit) – Available for let-out properties, under New Regime
Example 1: Rental Income ₹20 Lakh with Home Loan
| Income Component | Amount (₹) |
|---|---|
| Gross Annual Rent Received | ₹20,00,000 |
| (-) Standard Deduction @ 30% | ₹6,00,000 |
| (-) Home Loan Interest Deduction | ₹2,00,000 |
| Taxable Rental Income | ₹12,00,000 |
| Tax Liability (New Regime) | 0 (Due to ₹12 Lakh Rebate) |
✅ No tax payable because taxable income is below ₹12 lakh!
Important Restrictions Under Section 115BAC(2) (New Tax Regime)
Under the new tax regime, certain deductions and set-offs are not allowed, including:
✅ No deduction for loss from house property against other income.
✅ No additional exemptions like HRA, Deductions under Chapter VIA
👉 Example: If your taxable income from salary is ₹10 lakh and rental income has a loss of ₹1 lakh (after deductions), you CANNOT set off this ₹1 lakh loss against salary under the new tax regime.
However, the standard deduction (30%) on rental income and home loan interest (without any limit) are still available.
Other Tax Benefits on Rental Income in Budget 2025
🔹 TDS on Rent Threshold Increased:
✔ Section 194I (TDS on Rent): Limit increased from ₹2,40,000/year to ₹50,000/month.
✔ This brings Section 194I in line with Section 194IB.
🔹 Higher TDS Exemption for Senior Citizens:
✔ Section 194A (TDS on Interest Income for Senior Citizens): Limit increased from ₹50,000 to ₹1,00,000.