The newly enacted Income Tax Act 2025 preserves and clarifies rent relief provisions for individuals who pay rent but do not qualify for house rent allowance, with specific eligibility criteria and documentation requirements coming into effect from April 2026.
India’s new Income Tax Act, 2025 keeps alive a familiar relief for people who pay rent but do not qualify for house rent allowance. Under Section 134, eligible taxpayers can claim a deduction for rent paid on accommodation used as their own home, whether the property is furnished or unfurnished. Tax specialists note that the provision is the renamed successor to Section 80GG of the older law and applies from April 1, 2026.
The relief is designed for individuals who actually bear housing costs themselves, including salaried employees and self-employed taxpayers, provided they do not receive qualifying HRA-linked income. According to the text of the section and commentaries published by tax sites, the accommodation must be the taxpayer’s own residence, and the claim is blocked if the taxpayer, spouse, minor child or relevant Hindu undivided family owns residential property at the place of residence or work. The deduction is also unavailable for those taxed under the default new regime unless they validly opt out.
The amount that can be claimed is capped at the lowest of three figures: rent paid minus 10% of total income, ₹5,000 for each eligible month or 25% of total income. Practical guides to the new law say the monthly ceiling can add up to ₹60,000 over a full year, but only if all other calculations support that amount. The percentages are applied to total income before this deduction is taken, not after.
Taxpayers are also expected to keep a clear paper trail. Ebizfiling’s summary says the claim must be supported by Form 31 under Rule 65 of the Income-tax Rules, 2026, alongside rent receipts, payment records, the landlord’s details and a valid rent agreement. The form replaces the older declaration used under the previous law. Financial Express has reported that would-be claimants should check eligibility before the financial year ends, especially where salary structures and HRA treatment may affect the outcome.
The section gives relief to people who rent their homes, but it is not a blanket benefit. Tax practitioners point out that rent paid to parents may be acceptable if the arrangement is genuine and the parent owns the property, while rent paid to a spouse does not bypass the ownership bar. The central test remains simple: the taxpayer must be genuinely living in rented accommodation, satisfy the ownership restrictions and claim only the amount the law allows.
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