Under the Income-tax Act, 2025, house rent allowance is dealt with through the section 19 deductions from salary. Taxpayers who pay rent but receive no HRA claim under section 134, limited to the least of rent over 10% of total income, ₹5,000 a month, and 25% of total income.
HRA relief is not in Schedule I. Salary allowances are dealt with through section 19, and rent paid without HRA is section 134. Schedule I carries business connection conditions under section 9(12).
The two routes for rent relief
There are two distinct provisions, and which one applies depends on whether your salary package includes a house rent allowance.
If you receive HRA, the relief comes through the salary computation in section 19, which carries the deductions from salary in a single table. Section 15 charges salary, section 16 defines it, and section 19 reduces it.
If you pay rent but receive no HRA, the deduction is section 134 — the successor to section 80GG — and it is capped at the least of three figures: rent exceeding 10% of total income, ₹5,000 per month, and 25% of total income.
The Income-tax Act, 2025 takes effect from 1 April 2026 and applies from tax year 2026-27. The Income-tax Act, 1961 continues to govern every year up to 31 March 2026 because of the repeal and savings provision in section 536. The Schedule contents described here are taken from the Act as enacted, incorporating the corrigenda notified in the Gazette on 3 September 2025.
Where each provision actually sits
| Topic | Income-tax Act, 1961 | Income-tax Act, 2025 |
|---|---|---|
| House rent allowance | Section 10(13A) | Dealt with through section 19 |
| Rent paid without HRA | Section 80GG | Section 134 |
| Standard deduction | Section 16 | Section 19(1), Table serial 2 |
| Self-occupied property annual value | Section 23(2) | Section 21(6) and (7) |
| Home loan interest | Section 24(b) | Section 22(1)(b) with the caps in section 22(2) |
| New regime restrictions | Section 115BAC | Section 202 |
How each route works
Where HRA is received — section 19
Section 19(1) computes income under the head Salaries after the deductions in its table. The section also carries the standard deduction at serial 2 — ₹75,000 where tax is computed under section 202(1), ₹50,000 otherwise — and the retirement reliefs at serials 3 to 14. Section 19(2) carries the conditions that limit those entries.
Where no HRA is received — section 134(1) and (2)
A deduction is allowed for rent paid for furnished or unfurnished accommodation occupied for the assessee's own residence. It is allowable on rent exceeding 10% of total income, subject to a maximum of ₹5,000 per month or 25% of total income, whichever is less. In practice the ₹5,000 monthly cap — ₹60,000 a year — usually governs.
Section 134(4) — who cannot claim
No deduction where residential accommodation is owned by the assessee, spouse, minor child, or the HUF of which the assessee is a member, at the place where the assessee ordinarily resides or works; or where the assessee owns accommodation elsewhere that is in their occupation and valued under section 21(6) or (7)(a); or where the assessee has income falling in Schedule III (Table serial 11).
Section 134(5) — the base for the percentages
10% of total income and 25% of total income mean those percentages of total income before allowing any deduction under this section. The sub-section resolves what would otherwise be a circular computation.
The regime question
Both routes have to be tested against section 202, the default new regime, which restricts most Chapter VIII deductions. Read section 202 before planning around either provision, and note that the higher ₹75,000 standard deduction is itself keyed to section 202(1).
Worked example
A self-employed professional with total income of ₹9,00,000 before this deduction, paying rent of ₹22,000 a month and owning no residential property, in tax year 2026-27.
| Limb of section 134(2) | Working | Amount |
|---|---|---|
| Rent paid in the year | ₹22,000 × 12 | ₹2,64,000 |
| Less 10% of total income | 10% × ₹9,00,000 | (₹90,000) |
| Limb 1 — rent exceeding 10% | ₹1,74,000 | |
| Limb 2 — ₹5,000 a month | ₹5,000 × 12 | ₹60,000 |
| Limb 3 — 25% of total income | 25% × ₹9,00,000 | ₹2,25,000 |
| Deduction allowed | Lowest of the three | ₹60,000 |
Despite ₹2,64,000 of rent, the deduction is ₹60,000. If the professional's spouse owned a flat in the same city, section 134(4)(a)(i) would deny the deduction entirely — even if the couple did not live in it.
Compliance checklist
- Establish first whether HRA is part of the package; that decides between section 19 and section 134.
- For section 134, confirm that neither you, your spouse, your minor child nor your HUF owns accommodation at your place of residence or work.
- Compute all three limbs of section 134(2) and take the lowest.
- Use total income before the section 134 deduction as the base for the 10% and 25% tests.
- Retain rent receipts and the landlord's details; deduction of tax on rent is dealt with in section 393.
- Check section 202 before claiming, since the default regime restricts most Chapter VIII deductions.
- Do not claim both HRA relief and the section 134 deduction.
Common mistakes
- Looking for HRA in a Schedule of the new Act.
- Claiming the full rent under section 134 and ignoring the ₹5,000 monthly cap.
- Overlooking property owned by a spouse or minor child, which disqualifies the section 134 claim.
- Using total income after the deduction as the base for the percentage tests.
- Claiming section 134 while also receiving and claiming relief on HRA.
All sixteen Schedules of the Income-tax Act, 2025
Because the numbering is widely misquoted, the full list is reproduced below from the Act as enacted. Note that Schedules II to VII are all exemption lists, split by who is claiming rather than by what the income is.
| Schedule | Read with | Subject as enacted |
|---|---|---|
| I | section 9(12) | Conditions for certain activities not to constitute business connection in India |
| II | section 11 | Income not to be included in total income |
| III | section 11 | Income not to be included in total income of eligible persons |
| IV | section 11 | Income not to be included in total income of eligible non-residents, foreign companies and other such persons |
| V | section 11 | Income not to be included in total income of certain eligible persons including investment funds, business trusts and their unit holders |
| VI | section 11 | Income not to be included in total income of certain eligible persons in an International Financial Services Centre or having income therefrom |
| VII | section 11 | Persons exempt from tax |
| VIII | section 12 | Income not to be included in the total income of political parties and electoral trusts |
| IX | section 48 | Deduction for tea, coffee and rubber development accounts |
| X | section 49 | Deduction for Site Restoration Fund |
| XI | section 2(91) | Recognised provident funds, approved superannuation funds and approved gratuity funds |
| XII | section 51 | Minerals, and groups of associated minerals |
| XIII | section 45(2) | List of articles or things |
| XIV | section 55 | Insurance business |
| XV | section 123 | Deduction for life insurance premia, contribution to provident fund, subscription to certain equity shares, etc. |
| XVI | section 350 | Permitted modes of investment or deposits by a registered non-profit organisation |
This is an explanatory guide, not tax advice, and it does not reproduce the section in full. Read the bare text of the section before you rely on it, and check for later amendments, the Income-tax Rules made under the new Act, and CBDT circulars and notifications.