Section 134 · Deductions
Section 134 of the Income-tax Act, 2025 — Deduction for Rent Paid (Old 80GG)
By CA Rajat Agrawal
Updated 04 Jul 2026
Chapter VIII
📜 What the law says — Section 134, Income-tax Act 2025
134. (1) In computing the total income of an assessee, subject to other provisions
of this section, there shall be deducted any expenditure incurred by him
towards payment of rent (by whatever name called) in respect of any furnished or
unfurnished accommodation occupied by him for the purposes of his own residence.
(2) The deduction under sub-section (1) shall be allowable on payment of such rent
exceeding 10% of his total income, subject to a maximum of ` 5000 per month, or
25% of total income for tax year, whichever is less.
(3) For the purposes of deduction under sub-section (1), such other conditions
or limitations having regard to the area or place in which such accommodation
is situated and other relevant consideration, as may be prescribed, shall be taken
into account.
(4) No deduction under this section shall be allowed to an assessee in any case,
where—
(a) any residential accommodation is—
(i) owned by the assessee or by his spouse or minor child or, where
such assessee is a member of a Hindu undivided family, by such
family at the place where he ordinarily resides or performs duties
of his office or employment or carries on his business or profession;
or
(ii) owned by the assessee at any other place, being accommodation
in the occupation of the assessee, the value of which is to be deter-
mined under section 21(6) or (7)(a); or
(b) the assessee has any income falling in Schedule III (Table: Sl. No. 11).
(5) For the purposes of this section, the expressions “10% of his total income” and
“25% of his total income” shall mean 10% or 25%, as the case may be, of the total
income of the assessee before allowing deduction for any expenditure under this
section.
Deduction in respect of certain donations for scientific research or rural
development.
In plain language
What Section 134 means
Section 134 of the Income-tax Act, 2025 (effective 1 April 2026, as amended by the Finance Act, 2026) lets an individual claim a deduction for the rent paid on his own residential accommodation when he does not receive House Rent Allowance (HRA). It is the re-numbered successor of the well-known Section 80GG of the Income-tax Act, 1961, and the money limits are substantively unchanged. It sits in the chapter dealing with deductions from gross total income.
Who can claim it
- Only individuals — companies, firms, LLPs and HUFs cannot claim under this section.
- People who get NO HRA — typically self-employed professionals, businesspersons, freelancers and salaried employees whose pay package does not include HRA. If you receive HRA and claim its exemption, you cannot use Section 134.
- You must be actually paying rent for a house (furnished or unfurnished) that you occupy for your own residence.
Key conditions and disqualifiers
- No self-owned house at your work/residence city: Neither you, your spouse, your minor child, nor your HUF should own residential accommodation at the place where you ordinarily reside or work.
- No self-occupied house elsewhere: If you own a house at any other place and you are treating it as self-occupied (nil annual value), you cannot claim under Section 134.
- You must not be in receipt of HRA for any period for which you claim this deduction.
- Declaration in Form No. 31 (under the Income-tax Rules, 2026) is mandatory — this replaces the earlier Form 10BA. It captures the landlord's name, address and PAN, the rent amount, the period of stay and the mode of payment.
How much can you deduct
The deduction is the least of the following three amounts:
- ₹5,000 per month (i.e. a maximum of ₹60,000 per year);
- 25% of total income for the tax year; and
- Rent paid minus 10% of total income.
Here "total income" means your income before allowing the Section 134 deduction itself (and computed in the manner the section prescribes). Because ₹5,000 a month is a hard ceiling, the practical benefit is modest for most taxpayers, and it disappears entirely when the rent you pay is 10% or less of your total income.
How it interacts with related sections
- HRA exemption: Section 134 is a substitute for the HRA route — you use one or the other, never both. Salaried people with HRA generally take the HRA exemption instead.
- House property income: Owning and self-occupying a house elsewhere (nil value) blocks this deduction, tying it to the house-property rules.
- Delegated power to CBDT: Section 134 empowers the CBDT to prescribe additional conditions by reference to the "area or place" of the accommodation, allowing region-specific fine-tuning through rules.
Practical implications
- Keep rent receipts and the rent agreement. If your annual rent exceeds ₹1,00,000, you must report the landlord's PAN in Form No. 31.
- File Form No. 31 on or before the ITR due date and e-verify it (Aadhaar OTP or DSC).
- Rent paid to a spouse is generally not accepted by tax authorities as genuine for this benefit; pay a genuine third-party landlord through traceable means (bank transfer/UPI).
- This is an old-regime style deduction; confirm eligibility under the regime you choose for the year, as most Chapter-based deductions are unavailable under the default new-regime computation.
💡 Example
Example 1 — self-employed consultant. Ms. Kavya is a freelance designer with total income of ₹8,00,000 and pays rent of ₹18,000 per month (₹2,16,000 a year). The three figures are: (a) ₹5,000 × 12 = ₹60,000; (b) 25% of ₹8,00,000 = ₹2,00,000; (c) ₹2,16,000 − 10% of ₹8,00,000 (₹80,000) = ₹1,36,000. The least is ₹60,000, so her Section 134 deduction is capped at ₹60,000.
Example 2 — modest rent, low income. Mr. Aslam has total income of ₹5,00,000 and pays rent of ₹4,000 per month (₹48,000 a year). The three figures are: (a) ₹60,000; (b) 25% of ₹5,00,000 = ₹1,25,000; (c) ₹48,000 − 10% of ₹5,00,000 (₹50,000) = negative. Because his rent (₹48,000) is less than 10% of income (₹50,000), figure (c) is nil — so he gets no deduction. This shows why the 10% floor matters.
A relatable story. Rohan quit his corporate job to run a small design studio. As a salaried employee he had happily claimed HRA every year, but now, self-employed, there was no HRA to claim on his ₹20,000-a-month rented flat in Pune. His CA pointed him to Section 134: he owned no house in Pune, filed Form No. 31 with his landlord's PAN, and shaved ₹60,000 off his taxable income. It wasn't the full rent — but it was a legitimate, documented saving he would otherwise have missed.
| Item | Rule under Section 134 |
|---|
| Who can claim | Individuals only (not receiving HRA) |
| Monthly ceiling | ₹5,000 per month |
| Annual ceiling | ₹60,000 per year |
| Percentage cap | 25% of total income |
| Excess formula | Rent paid minus 10% of total income |
| Deduction allowed | Least of the three above |
| Ownership bar | No own house (self/spouse/minor child/HUF) at work or residence city; no self-occupied house elsewhere |
| Mandatory declaration | Form No. 31 (replaces old Form 10BA) |
| Landlord PAN | Required if annual rent exceeds ₹1,00,000 |
| 1961 Act equivalent | Section 80GG |
Related sections
Section 80GG (1961 Act) — Predecessor deduction for rent paid Section 10(13A) — HRA exemption (mutually exclusive with rent deduction) Section 133 — Deductions in respect of certain donations (80G) Section 132 — Deduction for interest on housing/education-related payments Income from house property — Annual value and self-occupied house rules Form No. 31 — Declaration for claiming rent deduction under Section 134
Frequently asked questions
Is Section 134 the same as the old Section 80GG?
Yes. Section 134 of the Income-tax Act, 2025 is the renumbered successor of Section 80GG of the 1961 Act, and the monetary limits and core conditions are substantively the same.
What is the maximum deduction I can claim for rent under Section 134?
The maximum is ₹5,000 per month, i.e. ₹60,000 per year. The actual deduction is the least of ₹5,000/month, 25% of total income, or rent minus 10% of total income.
Can salaried employees claim Section 134?
Only salaried employees who do NOT receive HRA can claim it. If you receive HRA and claim its exemption, you must use the HRA route instead of Section 134.
Do I need to submit any form to claim this deduction?
Yes. You must file a declaration in Form No. 31 under the Income-tax Rules, 2026 (which replaces the earlier Form 10BA), on or before the ITR filing due date, and e-verify it.
Is the landlord's PAN mandatory?
The landlord's PAN must be reported in Form No. 31 if your annual rent exceeds ₹1,00,000. Keep rent receipts and, ideally, pay through bank transfer or UPI.
Can I claim if I own a house in another city?
You can claim only if that other house is not treated by you as self-occupied at nil value, and you own no residential house at your current place of work or residence. Owning a self-occupied house elsewhere disqualifies you.
Can I claim Section 134 if I pay rent to my parents?
Rent paid to parents can qualify if the arrangement is genuine — they must actually own the property, receive the rent, and declare it as income. Rent paid to a spouse is generally not accepted.
C
CA Rajat Agrawal
Chartered Accountant, EaseValue · Reviewed 04 Jul 2026
This explainer is prepared and reviewed by EaseValue's tax team, based on the text of the Income-tax Act, 2025 (as amended by the Finance Act, 2026).
Disclaimer: This page explains the law in general terms for education and is not professional advice. The Income-tax Act, 2025 takes effect from 1 April 2026; provisions, thresholds and interpretations may change. Please confirm your specific position with our team before acting.
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