How Budget 2025 Impacts Borrowers—Tax Breaks & Loan Deductions Explained

The Union Budget 2025 has shifted the financial ground for many Indians. New tax slabs, higher deductions, and updated rules on house property all affect how much money actually lands in your pocket each month.

With higher disposable incomes post-Budget 2025, borrowers may rethink loan choices. Read on as we explore what changed and how it affects borrowing, prepayment, or refinancing.
 

What Changed in Union Budget 2025?

Let’s take a quick look at what the Budget 2025 has to offer:
•    New Tax Slabs and Larger Rebate: Under the revised new tax regime, many middle-income earners now see lower taxes and incomes up to ₹12 lakh may effectively be tax-free because of the rebate changes. 
•    Higher Standard Deduction in the New Regime: The standard deduction in the new regime is ₹75,000. This raises net take-home for salaried taxpayers. 
•    House-Property Rules Updated in the Finance Bill: The Finance Bill includes provisions that change how the annual value for owner-occupied houses is treated (for example, clarifications around when a house’s annual value can be taken as nil for up to two houses). That can affect tax on “income from house property.” 
•    Support for Agricultural Borrowers: For farmers, the Kisan Credit Card loan limit under certain interest-subvention schemes was raised, a targeted credit change that indirectly eases rural liquidity.
On this note, with Hero FinCorp’s quick personal and home loan solutions, you can turn the extra savings from Budget 2025 into smarter borrowing power. Get our personal loan app now!

What Do the Changes Mean for Borrowers?

It’s only natural to wonder ‘What’s in it for me? We break it down:
•    More Disposable Income Means Higher Repayment Ability: If your tax bill falls, you’ll have more monthly cash to service EMIs or qualify for a larger loan. The debt-to-income ratio shrinks.
•    Tax and Non-tax Factors Influence Home Loan Decisions: Common tax benefits that borrowers still rely on: interest on a self-occupied home is normally allowable under Section 24 (historically up to ₹2 lakh for self-occupied cases), and principal repayment can be claimed under Section 80C (up to ₹1.5 lakh). These rules affect the net cost of a home loan. 
•    Personal Loans Remain Non-taxable/Not Tax-Deductible for Personal Use: If you take a personal loan to meet personal expenses (medical, travel, repairs), the interest is not eligible for income-tax deductions. You can also get a tax deduction if you get a personal loan for home renovation, repair, or construction, higher education, or business.

How Should Borrowers Capitalise on the Opportunity?

How can you make the best of this situation? Here are some actionable tips:
•    Re-Compute Your EMI Room: With higher take-home pay, you may afford a larger EMI. Rerun EMI numbers (loan amount × tenure × rate) before applying. Use Hero FinCorp’s personal loan EMI calculator to test different scenarios quickly. 
•    Compare the Old and New Tax Regimes: If you have home-loan deductions, run the numbers both ways (new regime vs. old regime). The better choice depends on the total deductions you still claim. If unsure, get a quick tax check. 
•    Avoid Assuming Tax Savings Cover the Whole Loan Cost: Even where deductions reduce tax, interest and fees still matter. Compare effective monthly outgo (EMI + fees + tax benefits) before deciding to borrow or refinance.

Conclusion 

The Union Budget 2025 allocates more disposable income to many taxpayers and clarifies certain housing property rules, both of which impact borrowing decisions. 
For personal expenses, remember personal loan interest typically isn’t tax-deductible. But you can use it to your advantage in certain cases. For home loans, tax rules still matter, but must be checked against the updated Finance Bill and income-tax guidance. 
Want to increase your spending power and get more liquidity? Apply for a personal loan with Hero FinCorp and get it sanctioned in less than 10 minutes!

Frequently Asked Questions

Has Budget 2025 made incomes up to ₹12 lakh tax-free?

Under the revised new regime and rebate rules, incomes up to about ₹12 lakh face minimal or no tax for many taxpayers. Check the Income-tax FAQs for exact slab details and conditions. 

Did Budget 2025 change home-loan interest deductions?

Budget materials and the Finance Bill contain several house-property provisions. The common practical approach is to check the current Section-24 and Section-80C rules (interest and principal limits) when you file or plan.

Are personal loan EMIs tax-deductible?

No. Interest on personal loans for personal consumption is not an income-tax deduction. If you’re borrowing for business use, different rules apply.

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