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Aug 07, 2025
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No more higher tax on vacant property as recommended in New Income Tax Bill 2025 due to suggestions by select committee
The select committee of Lok Sabha has found a couple of drafting issues in Clause 21 of the Income Tax Bill 2025, which talks about the annual value of residential house properties and has recommended two key changes. The first change is the deletion of the phase “in normal course” and the second relates to deeming house rent provisions. Chartered Accountants we spoke to said that if the provisions of the Income Tax Bill 2025 were implemented without incorporating these suggestions, the annual value of a house property would have gone up, resulting in a higher tax liability. Thankfully, because of these suggestions, the tax treatment remained the same as it was under the Income Tax Act, 1961.
What did the Select Committee say?
Based on the suggestions from the Income Tax Bill, 2025, here’s what the select committee had to say:
The Committee, after a careful review of Clause 21, identified drafting issues in 21(2) that could lead to ambiguity in determining the annual value of properties experiencing vacancy.
The committee, therefore, recommend two key changes: first, that the phrase "in normal course" be deleted, and second, that the clause be amended to explicitly provide for a comparison of the actual rent received with the "deeming rent," as was available in the existing Act.
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