Deductions in respect of rents paid
[Section-134 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 134(1) of 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.
Section 134(2) of Income Tax Act 2025
134(2) The deduction under sub-section (1) shall be allowable on such rent exceeding 10% of his total income, subject to a maximum of five thousand rupees per month, or 25% of total income for tax year, whichever is less.
Section 134(3) of Income Tax Act 2025
134(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 prescribed, shall be taken into account.
Section 134(4) of Income Tax Act 2025
134(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 determined under section 21(6) or (7)(a); or
- (b) the assessee has any income falling in Schedule III (Table: Sl. No. 11).
Section 134(5) of Income Tax Act 2025
134(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.
FAQs on Section 134 of Income Tax Act 2025
What is the basic deduction available under Section 134 of the Income Tax Act, 2025?
Any expenditure incurred by an assessee towards rent paid for residential accommodation occupied for their own residence is eligible for deduction, subject to conditions.
How much rent can be claimed as a deduction under Section 134?
The deduction is allowed only for the amount of rent paid exceeding 10% of total income, subject to a maximum of ₹5,000 per month or 25% of total income for the tax year, whichever is less.
What does “total income” mean for the purpose of this section?
It refers to the total income before allowing the deduction under Section 134.
Can an assessee claim full rent paid as deduction?
No, only the rent exceeding 10% of total income can be claimed, subject to the stated limits.
What is the maximum deduction that can be claimed in a year?
The deduction cannot exceed ₹60,000 per annum (i.e., ₹5,000 per month) or 25% of the total income, whichever is less.
Is there any restriction if the assessee or their family owns a house?
Yes, no deduction is allowed if the assessee or their spouse, minor child, or HUF owns a residential accommodation at the place of residence or work.
Is deduction allowed if the assessee owns a house at another place but resides in rented accommodation?
No, if the owned house is in the occupation of the assessee and its value is computable under Section 21(6) or 21(7)(a), deduction under Section 134 is not allowed.
Can an assessee claim deduction if they have income under Schedule III (Table: Sl. No. 11)?
No, such assessees are specifically excluded from claiming this deduction.
What type of accommodation qualifies for this deduction?
Any furnished or unfurnished accommodation taken on rent for the assessee’s own residential purpose qualifies.
Are there any area-based conditions to be fulfilled?
Yes, the government may prescribe additional conditions based on the area or place of accommodation and other relevant considerations.
Is it necessary to submit rent receipts to claim this deduction?
While the Act itself doesn’t specify documentation, it is advisable to retain rent receipts or proof of payment as required under prescribed conditions.
Is this deduction available to both salaried and non-salaried individuals?
Yes, the provision applies to all assessees, irrespective of the source of income, provided they fulfill the conditions.
What happens if rent paid is less than or equal to 10% of total income?
In such cases, no deduction under Section 134 will be available.
Can a person living with parents and paying rent to them claim deduction?
Yes, provided all conditions of Section 134 are fulfilled and the arrangement is genuine, not falling under the ownership exclusions.
From when is this section applicable?
It is applicable from 1st April, 2026, as per the Income Tax Act, 2025.
Can HUFs claim deduction under this section?
Yes, but the HUF should not own any house as specified in Section 134(4) and must meet all other conditions.
Does the deduction depend on the city or locality of residence?
Possibly yes, as Section 134(3) allows conditions based on area or place, which may be prescribed by rules.
Is rent paid for shared accommodation eligible?
Yes, rent paid for shared accommodation may qualify if the assessee can establish individual payment and usage for own residence.
Is advance rent or refundable deposit deductible under this section?
No, only actual rent expenditure incurred for the relevant tax year is deductible.
Can this deduction be claimed along with other housing-related deductions?
Yes, provided there is no ownership conflict and the same expenditure is not claimed under multiple sections.
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