by THO
Finance Minister Nirmala Sitharaman announced on February 1 that the TDS threshold for rental income will be raised from ₹2.4 lakh per year to ₹6 lakh per year. This move aims to reduce the number of transactions subject to TDS and provide relief to small landlords.
In her Budget 2025 speech, she said the government has proposed increasing the annual threshold for Tax Deduction at Source (TDS) on rent from the current ₹2.4 lakh to ₹6 lakh.
“I propose to rationalise Tax Deduction at Source (TDS) by reducing the rates and thresholds above which TDS is deducted.
Further, threshold amounts for tax deduction will be increased for better clarity and uniformity,” Sitharaman said.
As per the Budget document, Section 194-I of the Income Tax Act mandates that entities, excluding individuals and Hindu Undivided Families (HUFs), must deduct TDS on rental income paid to residents if it exceeds the specified limit. With the revision, the tax deduction will be required only when rental payments exceed ₹50,000 per month.
How will these tax changes help, and who will benefit?
The proposed change is expected to simplify compliances and reduce the tax burden on small-scale landlords while maintaining tax efficiency.
This means that if you rent out a property and earn less than ₹6 lakh annually, you will not have to worry about TDS deductions from your rental income. This will go a long way in helping middle-class landlords who rely on rental income post-retirement or for additional income. This includes landlords who rent apartments or office spaces.
It will also benefit tenants paying lower rent amounts as it seeks to reduce compliances linked to deducting and remitting TDS.
Anuj Puri, chairman of Anarock Group, points out that these measures announced in Budget 2025 will help middle-class homebuyers, landlords, and investors benefit from reduced tax liabilities, better affordability, and fewer compliance hassles.
“By simplifying financial constraints and tax rules, the budget has made property ownership and rental housing more accessible,” he said.
