₹60,000 gone? CA breaks down what’s changing in housing under new tax regime
For taxpayers with two or more houses, any additional property is considered "deemed to be let out" — and is taxed based on notional rent, even if it isn’t rented.
- Sep 14, 2025,
- Updated Sep 14, 2025 7:15 AM IST
Nearly 60 lakh Indian taxpayers are set to lose a key tax break worth up to ₹60,000 annually under the new income tax regime.
The old regime allowed individuals to claim a deduction of up to ₹2 lakh annually on interest paid for self-occupied housing loans, effectively reporting a "loss under house property" and offsetting it against other taxable income. But this option is off the table in the new tax regime.
Kanan Bahl, a chartered accountant and wealth educator, flagged the shift on LinkedIn, noting that 59.7 lakh individuals leveraged this provision to save up to ₹60,000 in yearly taxes — particularly those in the 30% slab.
Under the old regime, the tax structure permitted:
- Deduction of municipal taxes paid
- A standard deduction of 30% on the Net Annual Value (NAV)
- Interest on housing loan: ₹2 lakh for self-occupied homes; unlimited for let-out properties
- Deductions under Section 80C for principal repayment and stamp duty
In contrast, the new regime, while still allowing municipal taxes and standard deduction, denies interest deduction for self-occupied homes and does not permit Section 80C deductions. Interest on let-out properties is allowed, but only if there’s no overall loss from house property.
For taxpayers with two or more houses, any additional property is considered "deemed to be let out" — and is taxed based on notional rent, even if it isn’t rented.
Bahl emphasized that "tax planning shouldn’t be your major investment thesis," given how frequently tax laws shift. The ₹2 lakh cap, for instance, only came into effect around 2016, replacing an era of unlimited set-off against income.
The move pushes taxpayers to re-evaluate their housing loan strategies and consider whether the simplicity of the new regime is worth sacrificing long-standing deductions.
Nearly 60 lakh Indian taxpayers are set to lose a key tax break worth up to ₹60,000 annually under the new income tax regime.
The old regime allowed individuals to claim a deduction of up to ₹2 lakh annually on interest paid for self-occupied housing loans, effectively reporting a "loss under house property" and offsetting it against other taxable income. But this option is off the table in the new tax regime.
Kanan Bahl, a chartered accountant and wealth educator, flagged the shift on LinkedIn, noting that 59.7 lakh individuals leveraged this provision to save up to ₹60,000 in yearly taxes — particularly those in the 30% slab.
Under the old regime, the tax structure permitted:
- Deduction of municipal taxes paid
- A standard deduction of 30% on the Net Annual Value (NAV)
- Interest on housing loan: ₹2 lakh for self-occupied homes; unlimited for let-out properties
- Deductions under Section 80C for principal repayment and stamp duty
In contrast, the new regime, while still allowing municipal taxes and standard deduction, denies interest deduction for self-occupied homes and does not permit Section 80C deductions. Interest on let-out properties is allowed, but only if there’s no overall loss from house property.
For taxpayers with two or more houses, any additional property is considered "deemed to be let out" — and is taxed based on notional rent, even if it isn’t rented.
Bahl emphasized that "tax planning shouldn’t be your major investment thesis," given how frequently tax laws shift. The ₹2 lakh cap, for instance, only came into effect around 2016, replacing an era of unlimited set-off against income.
The move pushes taxpayers to re-evaluate their housing loan strategies and consider whether the simplicity of the new regime is worth sacrificing long-standing deductions.