Section 134 Income Tax Act 2025: How Much House Rent Deduction Can You Claim?

Section 134 permits a deduction for eligible rent paid for a residence, subject to an income-based calculation, a monthly ceiling and specific ownership and other exclusions.

Current law: Section 134 of the Income-tax Act, 2025 applies from 1 April 2026. It broadly replaces Section 80GG of the Income-tax Act, 1961. The deduction is subject to the statutory provision and prescribed conditions; it is not an automatic deduction for every tenant.
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What does Section 134 provide?

Under Section 134(1), an assessee may deduct expenditure incurred towards rent, by whatever name called, for furnished or unfurnished accommodation occupied for the assessee's own residence. The amount must satisfy the limits in sub-section (2), prescribed conditions under sub-section (3), and exclusions under sub-section (4).

How is the rent deduction calculated under Section 134(2)?

The deduction is limited to the lowest of the following amounts:

  1. Actual rent paid during the tax year minus 10% of total income calculated before the Section 134 deduction;
  2. Rs 5,000 per month (Rs 60,000 for twelve eligible months); or
  3. 25% of total income calculated before the Section 134 deduction.

If rent paid does not exceed 10% of the relevant total income, no positive deduction arises under the first limb. The applicable period of rental occupation must be considered when applying the monthly ceiling.

Calculation: Deduction = lower of [rent paid - 10% of pre-deduction total income], [Rs 5,000 per eligible month] and [25% of pre-deduction total income], subject to a minimum of zero and all other conditions.

Who is eligible and when is the deduction disallowed?

Section 134(1): residential use

The rent must be paid for accommodation actually occupied by the assessee for the assessee's own residence. Furnished and unfurnished accommodation are both covered.

Section 134(3): prescribed conditions

Additional prescribed conditions or limitations may apply, taking account of the accommodation's location and other relevant factors. Taxpayers should check the applicable Income-tax Rules and prescribed declaration requirements for the relevant tax year.

Section 134(4)(a): ownership restrictions

The deduction is unavailable if residential accommodation at the place where the assessee ordinarily resides, works or carries on business or profession is owned by the assessee, the assessee's spouse, minor child, or the Hindu undivided family of which the assessee is a member. It is also unavailable where the assessee owns residential accommodation at another place which the assessee occupies and whose value is determined under Section 21(6) or 21(7)(a).

Section 134(4)(b): specified income

No deduction is available where the assessee has income falling in Schedule III, Table, serial number 11. This exclusion is relevant to house rent allowance and the statutory exemption regime; a taxpayer should not assume both benefits can be claimed for the same circumstances.

Relevant statutory expressions

Assessee: A person liable under the Act and otherwise falling within the statutory definition; the right to deduct rent remains subject to Section 134.
Rent: Expenditure towards payment for residential accommodation, by whatever name called, as described in Section 134(1).
Total income for the percentage tests: Section 134(5) specifies that 10% and 25% are calculated on total income before the deduction under Section 134 itself.
Tax year: The period used under the Income-tax Act, 2025 for computation and assessment of income; check the Act's general definitions for its precise application.

Practical examples of the rent deduction

Example 1: full-year rent

Assume eligible rent of Rs 1,80,000 in a year and total income before the Section 134 deduction of Rs 6,00,000. Rent less 10% of income is Rs 1,20,000; the annual monthly ceiling is Rs 60,000; and 25% of income is Rs 1,50,000. The deduction is Rs 60,000, assuming all eligibility conditions are met.

Example 2: lower rent

Assume eligible annual rent of Rs 90,000 and pre-deduction total income of Rs 5,00,000. The three figures are Rs 40,000, Rs 60,000 and Rs 1,25,000. The deduction is Rs 40,000, subject to the remaining conditions.

Example 3: rent below the 10% threshold

If rent paid is Rs 45,000 and pre-deduction total income is Rs 5,00,000, rent is below 10% of income (Rs 50,000). No deduction arises under the calculation.

What records should a taxpayer maintain?

Keep the rent agreement where available, rent receipts, bank or payment records, the landlord's particulars and evidence of residential occupation. Verify the declaration and filing requirements prescribed for the relevant tax year. Documentation does not override the exclusions in Section 134.

How does Section 134 compare with Section 80GG?

Section 134 broadly carries forward the rent deduction previously provided under Section 80GG of the Income-tax Act, 1961. The newer provision should be applied for tax years governed by the Income-tax Act, 2025; the earlier provision remains relevant for earlier years. The taxpayer should separately check eligibility under the tax regime selected for the relevant year.

Frequently asked questions

Is Section 134 available to everyone who pays house rent?

No. The statutory calculation, ownership restrictions, specified-income exclusion and prescribed conditions must all be satisfied.

What is the maximum monthly deduction?

The ceiling is Rs 5,000 per month, but the actual deduction can be lower under the income-based tests.

Can a self-employed person claim this deduction?

Potentially, yes, where the statutory conditions and applicable tax-regime rules are satisfied.

Can I claim Section 134 if my spouse owns a house in the city where I work?

Section 134(4)(a) generally excludes the deduction where the spouse owns residential accommodation at the relevant place specified in the provision.

Can I claim the deduction while receiving exempt house rent allowance?

Section 134(4)(b) excludes a person having income falling within Schedule III, Table, serial number 11. The HRA position should be examined before making a claim.

Official legal references

Income Tax Department: Section 134, Income-tax Act, 2025

Gazette of India: Income-tax Act, 2025

Updated: 10 November 2026. General legal information; check the latest statutory text, rules and applicable tax regime before filing.