In 2025, the Government of India updated the whole set of regulations regarding home rent in order to facilitate the renting process more comfortable, more convenient, fair and transparent to both renters and property owners. The updates come in the wider intent to modernize the rental housing market and how rental income is taxed.
Higher TDS Exemption Limit
The TDS (Tax Deducted at Source) exemption limit on rent has been raised which is one of the greatest changes. Previously, when a tenant at least paid ₹2.4 lakh Indian rupees annually (₹20,000 Indian rupees monthly), a 10 % TDS was to be deducted on the payment of rent. This led to cash flows problems to numerous landlords. The exemption level has now been increased to 6 lakhs per annum (₹50,000 per month), and as such the TDS will not have to be deducted by tenants, until the amount of rent exceeds this limit.
Model Tenancy Law for Better Agreements
Rental income is to be taxed in the rising under the head Income from House Property as rent-charge earners and is to be not taxed as business income as is being done so far. This will be applicable w.e.f. April 2025. Such an alteration simplifies the reporting of the rental income by landlords. Now they are entitled to deductions in municipal taxes paid, a regular 30 % of the deduction in regular repairs and interest of home loans even in rented out homes.
Model Tenancy Law to Get Better agreements
The government has gone ahead to advocate the Model Tenancy Law that provides a guideline on rent agreements. Before rent can be raised, the landlords are required to provide tenants a written notice of 3 months. In addition, all rent contracts have to be registered to the area renting authority within 60 days, which confers an absence of conflict and furthermore an open book.
Benefits for Both Sides
These are to be reformed in a way that both a landlord and a tenant are balanced. Landlords will have improved cash flow and the tax law being easier to understand and tenants will have a greater sense of protection and predictable raises with rent increases. The new system also gives more incentive to people to engage in renting houses legally which can expand the commercial housing market in India.
Final Thoughts
The home rent rules 2025 mark a significant improvement towards easing the process of renting a home in India and making it more secure. As a tenant or a landlord, it is important to be aware of these changes which will prevent confusion and can lead to more informed financial decisions.
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