Finance Bill 2025 simplifies the taxation of self-occupied properties by relaxing conditions under Section 23(2) of the Income-tax Act, 1961. Previously, the annual value of a self-occupied property was considered nil only if the owner resided there or was unable to due to business, profession, or employment. The amendment removes this restriction, allowing the annual value to be nil if the owner cannot occupy the property for any reason. However, this benefit applies only to two properties chosen by the taxpayer. If a taxpayer owns more than two properties, they must specify which two will have a nil annual value for taxation. These changes are effective from the previous year 2024-25 (assessment year 2025-26).
Page Contents
- FAQs – Budget 2025: Annual value of the self-occupied property simplified
- Q1. What are the changes as regards self-occupied property in Finance Bill 2025?
- Q.2 What were the conditions in section 23(2) of the Income Tax Act,1961 prior to Finance Bill 2025 for taking annual value of Self-occupied property as nil?
- Q.3 How have the conditions in section 23(2) of the Income Tax Act,1961 been relaxed in Finance Bill 2025?
- Q.4 I have one house in Bangalore wherein my mother is staying and I have another house in Mumbai where I am staying. I have 3rd house in Delhi, which is vacant. After Finance Bill 2025, can I take annual value of these houses as nil for taxation purposes?
- Q.5 For how many self-occupied properties, annual value can be taken as Nil?
- Q.6 When will the changed provisions relating to self-occupied property come in force?
FAQs – Budget 2025: Annual value of the self-occupied property simplified
Q1. What are the changes as regards self-occupied property in Finance Bill 2025?
Ans. The taxation of self-occupied property has been simplified. The conditions provided in Section 23(2) of Income-tax Act,1961 for determining annual value of self-occupied property as Nil have been relaxed.
Q.2 What were the conditions in section 23(2) of the Income Tax Act,1961 prior to Finance Bill 2025 for taking annual value of Self-occupied property as nil?
Ans. Prior to Finance Bill 2025, annual value of a self-occupied property was taken as nil if it was occupied by the owner for his own residence or if he cannot reside therein due to reasons of his business, profession or employment.
Q.3 How have the conditions in section 23(2) of the Income Tax Act,1961 been relaxed in Finance Bill 2025?
Ans. The annual value of a self-occupied property is now to be taken as nil if it is occupied by the owner for his own residence or if he cannot occupy it due to any reason. Therefore, additional condition of not being able to reside therein due to his business or employment or profession has been done away with.
Q.4 I have one house in Bangalore wherein my mother is staying and I have another house in Mumbai where I am staying. I have 3rd house in Delhi, which is vacant. After Finance Bill 2025, can I take annual value of these houses as nil for taxation purposes?
Ans. The annual value of house property can be taken as nil for taxation purposes only if no rent or any other benefit is derived from such property. However, this benefit is in respect of only two properties at the option of the taxpayer. Therefore, the taxpayer can choose two out of the three houses in this example, for determining the annual value of such properties as per section 23(2) of the Act.
Q.5 For how many self-occupied properties, annual value can be taken as Nil?
Ans. For two of such house properties which the owner can specify.
Q.6 When will the changed provisions relating to self-occupied property come in force?
Ans. The new provisions will apply from previous year 2024-25 i.e. assessment year 2025-26 onwards.
