Section 134 of the Income Tax Act 2025

Section 134 of the Income Tax Act, 2025, allows a deduction in the total income of the assessee on rent payment for any furnished or unfurnished accommodation occupied by them for residence if they do not receive House Rent Allowance (HRA).

This deduction is applicable if the rent exceeds 10% of the total income, subject to a maximum of ₹5000 per month, or 25% of the total income received in the tax year, whichever is less. A HRA calculator offers an easy way to estimate the tax deduction you can claim by paying house rent.

Section 134 of the Income Tax Act, 2025, replaces the rent deduction under Section 80GG of the Income Tax Act, 1961. The major provisions of this income tax rules, including the deduction limits for house rent, have remain unchanged in the new Income Tax Act, 2025.

That said, the new section has been renumbered and structured in language that is easier to understand for better interpretation by layman. Overall, there is a shift from section-based references in the earlier act to schedule-based references in the new act for better clarity and enhanced compliance by taxpayers.

The core purpose of Section 134 remains the same as that of Section 80GG, which deals with deductions for rent paid for residential accommodation. It is applicable when the taxpayer does not receive House Rent Allowance (HRA).

Section 134 has been updated and restructured so that it is easier to understand for the average taxpayer. This section of the Income Tax Act, 2025 is designed to provide relief to individuals paying rent even if there is no separate HRA component in their salary slip.

Taxpayers need to meet the key eligibility criteria laid out in Section 134 to claim house rent deductions and remain tax-compliant. Check out the basic eligibility criteria to claim deductions under Section 134 of the Income Tax Act, 2025:

Tax deduction benefit offered under Section 134 of the Income Tax Act, 2025, is calculated using the below mentioned formula:

Deduction u/s 134 = Actual Rent Paid – 10% of Total Income in the tax year

The above calculation is subject to the below criteria:

Maximum deduction allowed is lower among ₹5,000 per month or 25% of total income for the tax year.

Taxpayers must fulfil certain conditions to claim deductions for house rent under Section 134 of the Income Tax Act, 2025. Check out the essential criteria below to ensure that you claim appropriate deductions:

Section 134 of the Income Tax Act, 2025, is an updated version of Section 80GG of the Income Tax Act, 1961. Below table illustrates the various differences between these two sections:

Taxpayers should follow the tax guidelines and eligibility criteria to claim appropriate deductions allowed under Section 134 of the Income Tax Act, 2025. Check out the key tax planning tips to ensure better tax compliance:

Section 134 of the Income Tax Act, 2025, replaces Section 80GG of the Income Tax Act, 1961. The new section is the same with respect to the deduction limits, rent deduction formula, and eligibility rules.

However, the primary change is the renumbering of the new act to improve its structure. It promotes clarity for better interpretation and implementation, thereby enhancing tax compliance.