Section 24 Deductions for House Property: Old vs New Tax Regime and NRI Rent TDS Explained

Income from an Indian house property is taxed on ownership and annual value, not only on rent actually received. The main change from April 1, 2026 is the shift from the Income-tax Act, 1961 to the Income-tax Act, 2025, which renumbered the core house-property provisions without changing most underlying principles.

For income earned between April 1, 2025 and March 31, 2026, taxpayers file for Assessment Year 2026-27 under the 1961 Act. Income earned from April 1, 2026 onward falls under the new Act and is reported by reference to the relevant tax year, beginning with Tax Year 2026-27.

That timing matters. A return currently being filed for Assessment Year 2026-27 still uses the old section numbers, even though the new Act governs income arising after April 1, 2026.

The largest regime difference concerns self-occupied homes. The default new regime disallows housing-loan interest for a self-occupied property, while the old regime generally permits a deduction of up to ₹2 lakh when the statutory conditions are met.

Rented properties retain more relief. Municipal taxes actually paid, the 30% standard deduction and eligible loan interest remain relevant when computing income from let-out or deemed let-out property.

The 2026 law moved the familiar rules into new sections

The old Act placed the charge on house-property income in Section 22, annual-value rules in Section 23 and the standard deduction and loan-interest rules in Section 24. The corresponding provisions under the 2025 Act are Sections 20, 21 and 22.

Other important changes include Section 25A becoming Section 23 for arrears and recovered unrealised rent, Section 26 becoming Section 24 for co-owned property, and Section 27 becoming Section 25 for deemed ownership.

Loss rules also moved. Section 71 becomes Section 109 for inter-head set-off, while Section 71B becomes Section 110 for carrying forward house-property losses. The default new regime is now Section 202, compared with Section 115BAC under the old Act.

The law still generally applies when a taxpayer owns a building or land appurtenant to a building, unless the owner occupies it for a taxable business or profession. Vacant land by itself is generally outside this head.

Stock-in-trade requires care. A completed building held as stock-in-trade can receive a nil annual-value treatment for up to two years from the end of the financial year in which its completion certificate is obtained. After that, a vacant property may produce a notional annual value.

A rented home keeps the core deductions under both regimes

A let-out property is actually rented during the year. Its annual value generally compares reasonable expected rent with actual rent received or receivable.

Expected rent can reflect municipal valuation, comparable local rents, fair rental value and standard rent where rent-control legislation applies. If vacancy causes actual rent to fall below expected rent, the vacancy allowance may permit actual rent to be used. Qualifying unrealised rent may also be excluded.

The computation follows four steps:

1. Start with gross annual value.
2. Subtract municipal or local-authority taxes actually paid by the owner.
3. Apply the 30% standard deduction to net annual value.
4. Subtract eligible interest on borrowed capital.

Municipal taxes must be levied by the local authority, borne by the owner and actually paid during the relevant year. An unpaid amount that is merely due ordinarily cannot be deducted for that year.

The 30% standard deduction is fixed. It does not depend on actual spending on repairs, painting, maintenance, rent collection, insurance, brokerage or society charges. If net annual value is ₹5 lakh, the deduction is ₹1.5 lakh, whether repairs cost ₹50,000 or ₹2 lakh.

These are the central Section 24 deductions under the old framework, with the corresponding standard-deduction rule now in Section 22 of the 2025 Act. The default new regime does not remove them for let-out or deemed let-out property.

Self-occupied homes face the sharpest regime split

A taxpayer may select up to two houses for nil annual-value treatment when the statutory conditions are met. If more than two homes are owned and none is rented, the remaining properties are generally treated as deemed let out.

A self-occupied house may also receive nil annual-value treatment when the owner cannot occupy it for a qualifying reason, provided it is not let and no other benefit is derived from it.

Under the old regime, qualifying acquisition or construction loans generally allow interest of up to ₹2 lakh when acquisition or construction finishes within five years from the end of the year in which the borrowing occurred and the required interest certificate is obtained.

The ₹2 lakh ceiling applies across the self-occupied houses selected by the taxpayer. It is not a separate ₹2 lakh deduction for each of two homes.

The lower ₹30,000 limit applies in other cases, including certain repair, renewal or reconstruction loans and acquisition or construction loans that do not meet the higher-limit conditions.

The default new regime takes a different approach. Interest on borrowed capital for a self-occupied house is not deductible. Since annual value is nil, the property ordinarily generates neither positive house-property income nor a deductible loss under that regime.

Pre-construction interest is spread over five equal instalments. The first is claimed in the year acquisition or construction is completed, and the remaining four are claimed over the next four years. For a self-occupied home, current-year interest and the applicable instalment remain subject to the ₹2 lakh or ₹30,000 limit.

Loss treatment can decide the regime comparison

Under the old regime, a house-property loss can generally be adjusted against income under other heads up to ₹2 lakh in a year. An unabsorbed loss can be carried forward for up to eight years, but can then be set off only against future house-property income.

The default new regime does not allow a house-property loss to reduce salary, capital gains, interest or another head of income. Section 202 treats the restricted loss as having received full effect, with no later deduction for that restricted amount.

Consider a let-out property with actual annual rent of ₹6,00,000, expected rent of ₹5,40,000, municipal taxes of ₹40,000 and housing-loan interest of ₹4,20,000:

Under the old regime, the ₹28,000 loss may generally be adjusted against other income because it falls within the ₹2 lakh annual ceiling. Under the new regime, the interest remains part of the property computation, but the resulting loss cannot reduce salary, bank interest or capital gains.

A separate self-occupied example shows the contrast. Where qualifying home-loan interest is ₹2,40,000, the old regime generally permits a maximum deduction of ₹2 lakh, subject to the statutory conditions. The new regime permits no deduction for that interest.

NRIs retain property deductions but face withholding duties

An NRI’s rental income from property in India is taxable in India because income arising through or from property in India is treated as accruing or arising there. Section 9(2)(b) of the 2025 Act expressly covers that income.

An NRI may generally claim municipal taxes actually paid, the 30% standard deduction, eligible housing-loan interest, vacancy relief, qualifying unrealised-rent exclusions and proportionate deductions for co-owned property.

Residence does not by itself remove those property-level deductions. The regime choice still affects self-occupied loan interest and the ability to adjust a rental-property loss against other income.

An NRI cannot claim the resident rebate merely because total income falls within the relevant threshold. Section 87A of the old Act and Section 156 of the new Act restrict the rebate to individuals who are resident in India.

The tenant’s withholding rule is separate from the landlord’s final tax computation. For periods governed by the 1961 Act, rent paid to an NRI falls under Section 195. From April 1, 2026, the corresponding rule appears in Section 393(2), Table Sl. No. 17 of the new Act.

The provision applies to “any person” making a chargeable payment to a non-resident. Unlike resident-rent provisions that operate above specified thresholds, the general non-resident payment entry does not prescribe a separate minimum rent threshold.

This is the central NRI rent TDS issue. A tenant should not assume that the simplified PAN-based procedure for rent paid to a resident landlord applies automatically when the owner is an NRI.

Withholding is not necessarily the NRI’s final tax bill

TDS may be calculated on the gross payment or at a rate higher than the tax ultimately payable on net rental income. The final computation can include municipal taxes, the 30% standard deduction and eligible loan interest.

If withholding exceeds the final liability, the NRI may claim the excess as a refund by filing the applicable Indian income-tax return. The landlord or payer may also consider a lower or nil deduction certificate where standard withholding would be excessive.

Under the new Act, Section 395 provides the mechanism for that certificate. The old Act uses Sections 195(2) and 197 for lower or nil deduction applications.

A tenant deducting tax from rent paid to an NRI may need to obtain a Tax Deduction and Collection Account Number, deduct and deposit the tax at the applicable time, file the prescribed TDS statement and issue the TDS certificate.

The old TAN provision is Section 203A. Section 397 performs the corresponding function under the new Act. The new provision requires persons deducting or collecting tax to obtain and quote a tax deduction and collection account number.

Deemed rent, co-ownership and older losses still need review

When more than two homes are neither rented nor selected for self-occupied treatment, the additional properties are generally deemed let out. Tax can then arise on expected rent even when the owner received nothing.

Deemed ownership can also override the registered title. The rules cover certain transfers to a spouse or minor child, allotments under cooperative-society or company housing schemes, qualifying part-performance possession, long-term lease rights of at least 12 years and arrangements that effectively allow enjoyment of the property.

Where ownership shares are definite and ascertainable, each co-owner reports a proportionate share of annual value, municipal taxes, the 30% deduction, loan interest and resulting income or loss. Section 24 of the 2025 Act carries forward that treatment.

Arrears of rent and recovered unrealised rent are taxable in the year of receipt, even if the taxpayer no longer owns the property then. A 30% deduction applies to the recovered amount. The operative old-Act provision is Section 25A, while Section 23 applies under the new Act.

The older Sections 25AA and 25B were replaced from Assessment Year 2017-18. That history explains why older property references can point taxpayers to the wrong provision.

House-property losses validly carried forward under Section 71B before April 1, 2026 remain protected by the transition provisions and may continue against house-property income, subject to the original eight-year period and the applicable regime restrictions.

Owners and tenants should retain purchase or allotment records, possession and completion certificates, loan sanctions, annual interest certificates, municipal-tax receipts, rent agreements, bank statements, vacancy records, unrealised-rent correspondence, co-ownership documents, TDS certificates, Form 26AS and Annual Information Statement records.

NRIs should also confirm the tenant has accurate PAN and residential-status information before rent payments begin. The first filing period under the new framework is Tax Year 2026-27.

This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.