New Home Rent Rules – In 2025, the Indian government rolled out a major update to its home rent rules—possibly the biggest shift we’ve seen in years. These changes are designed to create a more balanced and transparent rental market, ensuring that both tenants and landlords get a fair deal. The updates touch on everything from how rent is taxed to how rental agreements are managed, aiming to make the entire system more efficient and less prone to disputes.
Let’s break down what’s changed and what it means for everyone involved in renting homes in India.
Higher Exemption Limit for TDS on Rent
One of the standout changes announced in the Union Budget 2025-26 is the hike in the tax deduction at source (TDS) exemption limit on rental income. Until now, landlords had to worry about TDS if their rental income exceeded 2.4 lakh rupees annually. That limit has now been increased to 6 lakh rupees per year.
So, what does this mean in simple terms? If you own a property and earn up to 6 lakh rupees a year in rent, your tenant no longer needs to deduct tax before paying you. This change is expected to ease cash flow for property owners, especially those with mid-range rental properties. It should also reduce delays in getting tax refunds, which has been a common hassle for landlords.
Rental Income Gets a New Tax Tag
Another significant change is how rental income is categorized under tax laws. Going forward, rent earned from housing properties will now fall under a new category called “income from housing property” under Section 28 of the Income Tax Act.
This change is mainly intended to streamline the process of taxation and reporting for landlords. The goal is to make tax planning easier and encourage more property owners to officially report their rental earnings. It’s a move that should bring more transparency into the financial side of renting, while also helping the government track income from this sector more accurately.
Implementation of the Model Tenancy Law
A big step toward making the rental market more structured is the implementation of the Model Tenancy Law. This law lays out clear responsibilities and rights for both landlords and tenants. One important requirement is that landlords must now give tenants a written notice three months in advance before raising the rent.
Additionally, all rental agreements must be registered with the local rent authority within 60 days of being signed. This is expected to significantly reduce misunderstandings and disputes, as everything will be documented and monitored officially. It’s also going to improve the legal backing for both landlords and tenants in case of any future disagreements.
Rules for Rent Hikes and Evictions
One of the longstanding problems in the rental space has been the lack of proper rules around rent hikes and evictions. The new guidelines fix that. Now, rent increases must be planned well in advance, and evictions need to follow proper procedures with clear documentation and sufficient notice.
These regulations are designed to protect both sides—landlords get a system they can rely on, and tenants are shielded from sudden rent spikes or unexpected eviction notices. It’s all about encouraging cooperation and trust between both parties.
Positive Outlook for the Rental Market
With all these changes, the government hopes to breathe new life into India’s rental housing market. Many property owners had previously hesitated to rent out their homes because of messy legalities, slow tax processes, and unpredictable tenant behavior. These new rules aim to fix those concerns.
By easing tax burdens, improving legal protection, and enforcing transparency, the government is making renting more attractive—for both homeowners and tenants. This should also help bring more properties into the rental pool, giving tenants more choices and improving availability.
The Road Ahead
These reforms are part of a broader strategy to modernize how residential renting works in India. The focus is clearly on building a rental market that’s fair, organized, and future-ready. If these rules are implemented effectively across states, they could lead to smoother rental experiences, fewer legal battles, and more trust between landlords and tenants.
The coming years will likely see more fine-tuning of these laws based on how they play out on the ground. But as it stands, these updates mark a solid step forward for India’s housing sector—making it more inclusive, more efficient, and better suited to the needs of today’s renters and landlords.
