Many taxpayers believe that only employees who receive House Rent Allowance (HRA) can claim tax benefits on rent. However, that’s not entirely true.
Even if your salary does not include HRA, you may still be able to claim a tax deduction on the rent you pay.
The Income Tax Act provides this benefit under Section 134, helping eligible taxpayers reduce their tax burden.
If you live in a rented house and are planning to file your Income Tax Return (ITR), here’s what you need to know.
What Is Section 134 and Who Can Claim It?
Section 134 of the Income Tax Act, 2025 (earlier known as Section 80GG) allows taxpayers to claim a deduction for rent paid even if they do not receive HRA from their employer.
The benefit is available to both salaried and self-employed individuals, but certain conditions must be met.
You can claim this deduction if:
You did not receive HRA during the financial year.
You pay rent for the house where you live.
You, your spouse, minor child, or Hindu Undivided Family (HUF) do not own a residential property in the city where you normally live or work.
You submit the required declaration through Form 10BA (now Form 31 under the new rules).
Without filing the required form, the deduction claim may be rejected.
How Much Tax Deduction Can You Get?
The deduction under Section 134 is limited to the lowest of the following three amounts:
Rent paid minus 10% of your total income.
₹5,000 per month (₹60,000 annually).
25% of your total income.
Whichever amount is the lowest among these three will be allowed as your tax deduction.
Keep These Documents Ready
If you plan to claim this benefit, proper documentation is extremely important.
You should keep:
Rent receipts
A valid rental agreement
Proof of rent payment through bank transfer, UPI, cheque, or other traceable methods
If your annual rent exceeds ₹1 lakh, you must also provide your landlord’s PAN details.
Having these documents ready can help avoid problems if your tax return is reviewed later.
How to Claim the Deduction in Your ITR
According to tax experts, eligible taxpayers should mention the deduction amount under the relevant deduction section while filing their Income Tax Return.
Remember, filing Form 10BA is mandatory before claiming the deduction.
Another important point is that this benefit is available only under the Old Tax Regime.
Taxpayers choosing the New Tax Regime cannot claim this deduction.
Tax Planning Tips Before the Financial Year Ends
If you want to take full advantage of this tax benefit, don’t wait until the last minute.
Make sure your rental agreement is properly executed and all rent payments are made through traceable channels.
Maintaining a clear record of payments throughout the year can make the claim process much smoother.
Before the financial year ends, review your eligibility carefully and check whether you meet all the conditions required under Section 134.
Don’t Forget to Compare Old and New Tax Regimes
Since this deduction is available only under the Old Tax Regime, taxpayers should compare their tax liability under both tax regimes before making a choice.
You should also confirm that neither you nor your spouse, minor child, or HUF owns a residential property in the city where you ordinarily reside or work, as this can affect your eligibility.
Final Takeaway
If you live in a rented house and do not receive HRA, you may still be eligible for valuable tax savings under Section 134.
Before filing your ITR, make sure you meet all eligibility conditions, submit Form 10BA, and keep your rent-related documents ready.
A little preparation can help you claim the deduction smoothly and avoid issues during tax assessment.
