Finance Bill 2025 introduces an amendment to Section 23 of the Income-tax Act to simplify the determination of the annual value of self-occupied properties. Currently, under sub-section (2), if a house is occupied by the owner for residence or cannot be occupied due to employment, business, or profession elsewhere, the annual value is considered nil. Sub-section (4) limits this benefit to only two properties specified by the owner. The new proposal seeks to amend sub-section (2) by stating that the annual value of any self-occupied property will be taken as nil if the owner occupies it for residence or cannot occupy it for any reason, without restriction to two properties. However, the benefit of two properties specified by the owner will still apply as before. This amendment will take effect from April 1, 2025, and will be applicable for the assessment year 2025-26 onward.
Budget 2025: Annual value of the self-occupied property simplified
Section 23 of the Act relates to determination of annual value. Sub-section (2) of the said section provides that where house property is in the occupation of the owner for the purposes of his residence or owner cannot actually occupy it due to his employment, business or profession carried on at any other place, in such cases, the annual value of such house property shall be taken to be nil. Further, sub-section (4) of the said section provides that provisions of sub-section (2) of the Act will be applicable in respect of two house properties only, which are to be specified by the owner.
2. 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 provision of sub-section (4) of section 23 of the Act which allows this benefit only in respect of two of such houses shall continue to apply as earlier.
3. This amendment will take effect from the 1st day of April, 2025 and shall accordingly apply for assessment year 2025-26 onwards.
[Clause 10]
Extract of Relevant Clauses of Finance Bill, 2025
Clause 10 of the Bill seeks to amend section 23 of the Income-tax Act, relating to annual value how determined.
Sub-section (2) of said section provides that where house property is in the occupation of the owner for the purposes of his residence or owner cannot actually occupy it due to his employment, business or profession carried on at any other place, in such cases, the annual value of such house or part of the house shall be taken to be nil. Further, sub-section (4) of the said section provides that provisions of sub-section (2) of the Act will be applicable in respect of 2 houses only.
It is proposed to substitute the sub-section (2) of the said section 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.
This amendment will take effect from 1st April, 2025 and shall apply to assessment year 2025-26 onwards.
Extract of Relevant Amendment Proposed by Finance Bill, 2025
10. Amendment section 23.
In section 23 of the Income-tax Act, for sub-section (2), the following sub-section shall be substituted, namely:––
“(2) 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.”.
