Section 134, Income-tax Act 2025: Deductions in respect of rents paid

What changed when Section 80GG became Section 134?

The number, not the deal. The 1961 Act carried the no-HRA rent deduction as Section 80GG; the Income-tax Act 2025 re-enacts it, the same in substance, as Section 134, titled "Deductions in respect of rents paid". Every rule that mattered under 80GG carries over: the least-of-three formula, the ₹5,000-a-month ceiling, the no-HRA condition, the home-ownership bars, and the old regime alone.

Two labels change around it. First, the HRA exemption this deduction is the fallback for, the old Section 10(13A), now lives in the Act's Schedule of exemptions rather than in the main text. Second, the declaration you file to claim the deduction, the old Form 10BA, is reissued as Form 31 under the Income-tax Rules 2026. The rent relief itself is unchanged; the change applies from tax year 2026-27, the first year the 2025 Act is in force.

Section 134, its title "Deductions in respect of rents paid", its succession from the old Section 80GG, and the reissue of Form 10BA as Form 31 are cross-checked against published copies of the enacted Act and the Income-tax Rules 2026.†

Who can claim the rent deduction, and who is shut out?

An individual who pays rent and gets no HRA, on the old regime. The deduction is meant to give renters who fall outside the HRA system some relief, so it splits cleanly into two groups of claimants and a short list of people it locks out.

You can claim Section 134 if you are:

• Self-employed: a freelancer, consultant, professional or proprietor who pays rent for their own home. There is no HRA in self-employment, so this is the main relief a renting business owner gets.
• Salaried without an HRA component: an employee whose salary structure carries no House Rent Allowance at all, so there is no HRA exemption to claim under Schedule II.

The claimant is an individual. A company, a firm or an LLP cannot claim it, and an HUF appears only in the ownership test below, not as a claimant. You must also be on the old regime: like the rest of Chapter VIII, Section 134 gives nothing under the default new regime.

The four conditions you have to meet

All four must hold for the whole tax year, or the deduction is disallowed:

• You receive no HRA. If your salary includes a House Rent Allowance you can claim exempt under Schedule II (old Section 10(13A)), Section 134 is closed to you: you use the HRA exemption instead. Receiving exempt HRA even for part of the year blocks Section 134 for that whole year.
• You actually pay rent for a home you live in. The accommodation, furnished or unfurnished, must be occupied by you for your own residence, and you must genuinely pay the rent, ideally by bank transfer so it can be proved.
• No home you own where you live or work. Neither you, nor your spouse, nor your minor child, nor an HUF you are a member of may own residential accommodation at the place where you ordinarily reside or carry on your work or employment.
• No self-occupied home elsewhere. If you own a house at any other place, you must not treat it as self-occupied for tax. Claiming a house in another city as self-occupied (nil annual value) and taking this rent deduction at the same time is not allowed.

The claimant is an individual, but the ownership bar reaches wider: a home owned by your spouse, your minor child or your HUF at the place where you live or work counts against you exactly as your own would.

How much can you deduct: the least-of-three test

Your deduction is the smallest of three figures, not the sum and not the largest. The section runs all three every year and hands you the lowest, which is why the answer is usually the ₹60,000 ceiling.

The income figure the percentages work on is your total income for the year, taken before this rent deduction. For this relief that figure is measured a particular way: it leaves out long-term capital gains, the short-term gains on listed shares taxed at the special rate, and a handful of special-rate incomes, and it is taken before the other Chapter VIII deductions. The result is often called your adjusted total income.†

How to work out your deduction, step by step

Four steps, once a year at filing:

• Fix your total income for the year, before this rent deduction and measured as your adjusted total income (long-term capital gains and the listed-share special-rate gains left out).†
• Work out the three limbs: ₹5,000 for each month you paid rent (up to ₹60,000); 25% of that income; and the rent you paid minus 10% of that income.
• Take the smallest of the three as your deduction. If the rent-minus-10% limb comes out at nil or negative (your rent is below a tenth of your income), the deduction is nil, whatever the other limbs say.
• Subtract it from your income on the old regime. The tax it saves is that amount times your marginal old-regime slab rate, plus the 4% cess: at most ₹60,000 × 30% × 1.04 = ₹18,720 a year, and less at lower slabs.

The income tax calculator linked below runs both regimes so you can see what the deduction is worth against your slab before you file.

Section 134 versus the HRA exemption

They solve the same problem for different people, and you use exactly one. If your salary carries an HRA line, you claim the HRA exemption (Schedule II, old Section 10(13A)) and Section 134 is closed to you. If it does not, or you are self-employed, Section 134 is your only rent relief.

The difference that matters is the ceiling. The HRA exemption has no fixed rupee cap: it is itself a least-of-three test, but its limbs are actual HRA received, rent minus 10% of salary, and 50% of salary in a metro (40% elsewhere), so a big salary and a big rent produce a big exemption. Section 134 caps out at ₹60,000 whatever your rent. A metro renter paying ₹45,000 a month shelters ₹60,000 under Section 134 and could shelter several times that through HRA. This is the single biggest reason to get an HRA component written into your salary if you rent and can influence your pay structure.

Our HRA exemption calculator, linked below, runs the salaried least-of-three test on your rent and salary; the income tax calculator shows either relief inside a full old-versus-new comparison.

How do you claim it? Form 10BA is now Form 31

You claim it in your return, after filing one declaration. Section 134 is not given by your employer through the year the way an HRA exemption is; it is a deduction you take at filing, and it hinges on a single form.

The mechanics:

• File the declaration. The old Form 10BA is reissued as Form 31 under the Income-tax Rules 2026: an online declaration that you paid rent, for which property, for how long, to whom, and that you meet the conditions. File it on or before your return's due date; without it the deduction is disallowed.†
• Give the landlord's PAN if your rent for the year tops ₹1,00,000. Below that no PAN is needed; above it, the landlord's PAN goes in the form, and if the landlord has none, a declaration to that effect.†
• Opt into the old regime for the year. Section 134 is unavailable on the default new regime, so you must be paying old-regime tax, through the return, or through Form 10-IEA where business income makes that route necessary.
• Enter the deduction in the Chapter VIII deductions schedule of your ITR (most claimants file ITR-1 or ITR-2, and a self-employed claimant ITR-3 or ITR-4), against the rent-paid field. Keep your rent receipts and bank proof; nothing is attached to the return, but the department can ask.

Return forms for the first 2025-Act filings (tax year 2026-27, filed in 2027) carry over the old Schedule VI-A rent-paid field until they re-label to Section 134. The ITR form finder linked below stays current as they land.

Traps and edge cases

The corners where claims go wrong:

• Any exempt HRA in the year kills the claim. If you drew HRA you could claim exempt for even a few months (say from a job you left mid-year), Section 134 is barred for the whole year. Plan which relief you will use before you switch jobs.
• A self-occupied home elsewhere blocks it. Owning a house in another city is fine only if you do not claim it as self-occupied. Declare it self-occupied for its nil annual value and you lose the rent deduction; the two benefits cannot be stacked.
• A home your spouse or minor child owns at your workplace counts as yours. The ownership bar reaches your spouse, your minor child and your HUF, not just you. A flat in your spouse's name in the city you work in shuts the deduction.
• Rent to parents can work; rent to a spouse does not. Paying genuine rent to a parent who owns the home is accepted if the money actually moves and the parent declares it as income. Rent paid to a spouse is generally not accepted, because the home is treated as shared rather than let to you.
• Cash rent with no trail is fragile. No rent agreement is legally required, but a claim backed only by cash and handwritten receipts is easy to disallow. Pay by bank transfer and keep the statements.
• The ₹60,000 cap is the whole story for most renters. Because the fixed limb almost always wins, paying a higher rent past a point adds nothing to the deduction. Do not assume a big-city rent buys a big deduction here.

Is Section 134 available under the new regime?

No. Like the rest of the Chapter VIII deduction basket, the rent-paid deduction is an old-regime benefit only. If you stay on the default new regime, Section 134 deducts nothing, whatever rent you paid and whether or not you get HRA.

That makes the deduction a reason to run the regime comparison, not a reason to assume the old regime wins. Its ceiling is low: the most it can ever save is ₹18,720 a year, at the top slab. Below about ₹12 lakh of income the new regime's rebate already zeroes your tax, so there is nothing for the deduction to save; the old regime, with Section 134 and whatever else you can stack, only pulls ahead once your income and total deductions are both large enough. The income tax calculator below runs both regimes so you can see it on your own numbers.

Should you rely on Section 134, and how do you get the most from it?

Claim it whenever you are on the old regime, get no HRA, and meet the conditions: it costs nothing but a declaration and there is no downside. But keep it in proportion. The ₹60,000 ceiling means the most Section 134 can ever save you is ₹60,000 × 30% × 1.04 = ₹18,720 a year, at the 30% slab, and around ₹12,480 at the 20% slab. It is a useful top-up, rarely a deciding one.

Do not let it choose your regime by itself. On a middling income, ₹18,720 or less of saving seldom outweighs the new regime's lower slabs and the rebate that zeroes tax up to ₹12 lakh. Add Section 134 to the old-regime side of the comparison, then run both; it tips the balance only when you are already stacking bigger breaks like the ₹1.5 lakh Section 123 basket, home-loan interest and health premiums.

If you live with parents who own the home and have no HRA, genuine rent to a parent can make you eligible for the deduction. Say you are a 30% taxpayer on ₹12,00,000 of income with no HRA, and you pay a parent ₹16,000 a month, ₹1,92,000 for the year: rent minus 10% of income is ₹1,92,000 − ₹1,20,000 = ₹72,000, so the ₹60,000 cap is the smallest limb and your deduction, worth ₹18,720 of tax to you. In the parent's hands the rent is house-property income taxed after a 30% standard deduction, so ₹1,92,000 becomes ₹1,34,400 taxable; if that keeps the parent inside the basic exemption, the family nets close to the full ₹18,720. The move only pays when the parent's slab is lower than yours, and only with real bank transfers and the rent declared.

The bigger lever is structural: if you are salaried and can influence your pay, get an HRA component written in. HRA has no ₹60,000 ceiling, so for a metro renter it shelters a large multiple of what Section 134 can. Where you cannot, Section 134 is the fallback, worth claiming but worth knowing the size of.

Worked examples

Section 134 FAQs

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