Loading...

⚠ ✕
❮ Top
☎ Help
☰
×

By creating an account you can:

Logo TaxTMI
Call Us / Help / Feedback✕

Contact Us At :

✉ E-mail: [email protected]

✆ Call / WhatsApp at: +91 99117 96707

For more information, Check Contact Us

FAQs :

To know Frequently Asked Questions, Check FAQs

Most Asked Video Tutorials :

For more tutorials, Check Video Tutorials

Submit Feedback/Suggestion :

Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters 0/2000
Make Most of Text Search ✕
  1. Checkout this video tutorial: How to search effectively on TaxTMI.
  2. Put words in double quotes for exact word search, eg: "income tax"
  3. Avoid noise words such as : 'and, of, the, a'
  4. Sort by Relevance to get the most relevant document.
  5. Press Enter to add multiple terms/multiple phrases, and then click on Search to Search.
  6. Text Search
  7. The system will try to fetch results that contains ALL your words.
  8. Once you add keywords, you'll see a new 'Search In' filter that makes your results even more precise.
  9. Text Search
╳
Add to...
You have not created any category. Kindly create one to bookmark this item!
✕
Create New Category
Hide
Title :
Description :
❮❮ Hide
❮ Default View
Expand ❯❯
Close ✕
🔎 Filters / Advanced Search ❯
TEXT

Press 'Enter' to add multiple search terms. Rules for Better Search

Search In
Main Text + AI Text ❯
  • Main Text
  • Main Text + AI Text
  • AI Text
Law:
---- All Laws---- ❯
  • ---- All Laws----
  • Benami Property
  • Bill
  • Central Excise
  • Companies Law
  • Customs
  • DGFT
  • FEMA
  • GST
  • GST - States
  • IBC
  • Income Tax
  • Indian Laws
  • Money Laundering
  • SEBI
  • SEZ
  • Service Tax
  • VAT / Sales Tax
Types:
---- All Types ---- ❯
  • ---- All Types ----
  • Act Rules
  • Case Laws
  • Circulars
  • Manuals
  • News
  • Notifications
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
Relevance Default Date
    News Bills
    Co-operative Societies - Rate of Income Tax
    News Bills
    Firms – Rate of Income Tax on Firms / Partnership Firm
    News Bills
    Local authorities - Rate of Income Tax
    News Bills
    Companies – Rate of Income Tax / Corporate Tax
    News Bills
    Income Tax - Rebate under section 87A
    News Bills
    AMENDMENTS IN THE CGST ACT, 2017 and IGST Act, 2017
    News Bills
    AMENDMENT TO SEVENTH SCHEDULE TO THE FINANCE ACT, 2001
    News Bills
    AMENDMENTS TO THE CUSTOMS ACT, 1962
    News Bills
    Decriminalisation of section 276A of the Act
    News Bills
    Extension of exemption to Specified Undertaking of Unit Trust of India (SUUTI) and providing for alt...
    News Bills
    Omission of certain redundant provisions of the Act
    News Bills
    Set off and withholding of refunds in certain cases
    News Bills
    Removal of certain funds from section 80G
    News Bills
    Denial of exemption where return of income is not furnished within time
    News Bills
    Alignment of the time limit for furnishing the form for accumulation of income and tax audit report
    News Bills
    Trusts or institutions not filing the application in certain cases
    News Bills
    Specified violations under section 12AB and fifteenth proviso to clause (23C) of section 10
    News Bills
    Combining provisional and regular registration in some cases
    News Bills
    Omission of redundant provisions related to roll back of exemption
    News Bills
    Treatment of donation to other trusts:
❮
❯
❯❯
Maximize Maximize Maximize
0 / 200
Expand Note
Add to Folder

No Folders have been created

+

Are you sure you want to delete "My most important" ?

NOTE:

Notes
Showing Results for :
Reset Filters
Results Found:
Show All Summaries Hide All Summaries
News Bills
Show AI Summary
Co-operative society tax rates updated: surcharge tiers retained; new concessional options introduced for qualifying manufacturing societies.
Co-operative societies will continue under the existing income-tax rate structure with a tiered surcharge framework for higher total income and marginal relief. Resident societies satisfying statutory conditions may opt for an optional reduced tax regime with a specified surcharge. Newly established manufacturing co-operative societies that commence production within a prescribed window and do not claim specified incentives may opt into a concessional tax regime for subsequent assessment years, subject to surcharge.
News Bills
Show AI Summary
Surcharge on firms applies beyond income threshold, with an upper cap limiting excess tax liability.
The Finance Bill 2023 maintains the existing rate of income-tax for firms and imposes a surcharge on firms whose total income exceeds the statutory threshold; the surcharge is added to income-tax but is capped so that the total tax plus surcharge on income above the threshold does not exceed, by more than the excess income, the income-tax payable on income at the threshold level.
News Bills
Show AI Summary
Local authority income-tax rate retained, with a capped surcharge limiting additional liability above the income threshold.
The Finance Bill maintains the existing specified income-tax rate for local authorities and imposes a surcharge on income-tax where total income exceeds a threshold; it caps the combined income-tax and surcharge liability so that the total payable on income above the threshold does not exceed the tax on the threshold amount by more than the excess income.
News Bills
Show AI Summary
Company tax rates revised with reduced options for eligible domestic firms, surcharge slabs retained and health and education cess applied.
The Finance Bill 2023 sets primary corporate tax regimes: specified base rates for domestic companies depending on turnover and election into concessional regimes; optional lower-rate regimes remain available subject to conditions. Surcharge rates for domestic and non domestic companies persist at prescribed slabs with marginal relief provided for surcharge; a Health and Education Cess is levied on tax inclusive of surcharge without marginal relief. A new provision fixes its own tax rate while surcharge is applied according to taxpayer status.
News Bills
Show AI Summary
Rebate under section 87A expanded to raise the exempt-income threshold for resident individuals under the new tax regime.
Rebate under section 87A grants a 100% rebate of income-tax payable to resident individuals whose total income does not exceed the specified threshold. From assessment year 2024-25 the rebate is extended to resident individuals whose income is chargeable under the proposed new tax regime provision (proposed sub section (1A) of section 115BAC), making them eligible for a full rebate where their total income falls within the revised threshold.
News Bills
Show AI Summary
GST Amendments broaden OIDAR taxability, impose statutory time limits for returns/statements, and decriminalise select offences.
The Finance Bill amends the CGST Act to permit composition levy for suppliers transacting through electronic commerce operators, restrict input tax credit by treating specified Schedule III transactions as exempt-supply value and excluding CSR-related credits, clarify retrospective registration exemptions, impose statutory time limits (with conditional extensions) for furnishing outward-supply details, periodic and annual returns and monthly statements by e-commerce operators, introduce penal liability for E-commerce operators for unregistered/composition supplier contraventions, decriminalise certain offences and raise prosecution thresholds, and give retrospective non-supply treatment to specified Schedule III activities; IGST changes broaden OIDAR taxability and revise place-of-supply rules.
News Bills
Show AI Summary
NCCD revision on specified cigarettes raises excise incidence under the Seventh Schedule and alters tariff rate application.
Revision of NCCD rates increases per thousand levies on specified HS 2402 cigarette subitems in the Seventh Schedule, effective 2 February 2023 with provisional collection available. Notification No. 05/2023 Central Excise exempts excise duty on blended CNG to the extent of GST paid on contained biogas/compressed bio gas, subject to specified conditions.
News Bills
Show AI Summary
Customs Tariff Rationalization: Revised duties, AIDC and SWS adjust tariffs and amend exemption notifications structure.
Amendments limit the two year validity rule for exemption notifications by excluding international agreements, diplomatic privileges, specified schemes and certain import categories; insert a nine month disposal deadline for Settlement Commission applications; clarify that countervailing and anti dumping determinations and reviews must follow rules under the Customs Tariff Act and that appeals lie against such determinations or reviews; and materially revise the First Schedule and related notifications to rationalize Basic Customs Duty rates, adjust tariff entries, and amend AIDC and SWS treatment while extending, discontinuing or rescinding targeted exemptions.
News Bills
Show AI Summary
Decriminalisation of liquidator prosecution: no new prosecutions under the provision after the sunset, existing prosecutions continue.
The amendment inserts a sunset clause decriminalising the provision that imposed criminal liability on liquidators for non compliance with distribution obligations: no fresh prosecution may be launched under the provision on or after 1 April 2023, while prosecutions instituted earlier remain unaffected. The change is justified by the government's decriminalisation policy and by the existing Insolvency and Bankruptcy Code regime and oversight that now govern liquidations.
News Bills
Show AI Summary
Tax exemption extension for SUUTI permits continued tax-free administration until a notified date, with revised vacation rules.
Proposal amends the UTI Repeal Act, 2002 to extend that no income-tax or other tax shall be payable by the Administrator in relation to the specified undertaking until the period ending on the thirtieth day of September, 2023, and to provide that the Administrator shall vacate office immediately on redemption of all schemes and payment of entire amounts to investors or from a date notified by the Central Government, whichever is earlier.
News Bills
Show AI Summary
Omission of redundant tax provisions: repeal of section 88 and specified income exclusions to streamline statutory law.
Proposal to omit a provision relating to rebate on life insurance premia and provident fund contribution-formerly in section 88-on the ground that it was sunsetted and superseded by the deduction regime under section 80C; and to omit specified clauses of section 10 that had already been sunsetted, with the amendments to take effect from the commencement of the next fiscal year beginning 1st April, 2023.
News Bills
Show AI Summary
Withholding of refunds: amended set-off and suspension rules let tax authorities withhold refunds pending assessment, limiting additional interest.
Amendments integrate set-off and withholding mechanisms so the tax authority may set off any refund against sums payable after giving written intimation; where part or no amount is set off, the Assessing Officer, with reasons recorded and prior approval of the Principal Commissioner or Commissioner, may withhold the remaining refund while assessment or reassessment is pending if grant of refund would likely affect revenue. Additional interest will not accrue for the period the refund is withheld, while other interest rights remain unchanged.
News Bills
Show AI Summary
Charitable donation deduction change removes named funds from eligible list, affecting deduction eligibility from next assessment year.
Amendment omits sub-clauses (ii), (iiic) and (iiid) of clause (a) of sub section (2) of section 80G, removing three named funds from the statutory list of organizations whose donations qualify for allowed deductions, thereby changing deduction eligibility under the approval-based framework.
News Bills
Show AI Summary
Denial of exemption for charities and institutions where income-tax returns are not filed within prescribed filing windows.
Amendments clarify that exemptions for charitable, educational and medical entities will be denied if the return of income for the previous year is not furnished within the time allowed under the principal return-filing provisions, requiring returns to be furnished in accordance with the updated-return provisions but within the initial statutory filing windows.
News Bills
Show AI Summary
Filing deadline alignment for trusts' accumulation statements: advance submission required to ease audit reporting and reconciliation burdens.
The Finance Bill proposes that trusts and institutions required to furnish prescribed accumulation statements advance filing so that Form 9A/10 is submitted at least two months before the due date for filing the return of income; this change is intended to resolve the difficulty auditors face in reporting statement details when audit reports are due one month prior to the return filing deadline and requires amendments to explanatory clauses governing accumulation and deemed application reporting.
News Bills
Show AI Summary
Exit tax on accreted income applicable when trusts fail re registration, deemed conversion triggers tax liability and payment obligation.
Failure by a trust or institution under the first or second regime to file required provisional, regular or re registration/approval applications within prescribed periods will be deemed a conversion not eligible for registration, attracting Chapter XII EB taxation. The tax is on accreted income (FMV of assets less liabilities per rules), charged at the maximum marginal rate and collectible in addition to other taxes. Principal officers/trustees and the specified person are jointly liable to pay the tax within fourteen days from the end of the previous year; the date of conversion includes the last date to apply.
News Bills
Show AI Summary
Specified violation: incomplete or false registration applications now justify cancellation of trust approvals under the automated regime.
Amendments expand the definition of specified violation to include applications that are incomplete or contain false or incorrect information, permitting cancellation of provisional approval/registration or approval/registration granted through the automated e filing process; the statutory text inserts clause (g) into the Explanation to the fifteenth proviso of clause (23C) of section 10 and into the Explanation to sub section (4) of section 12AB, with effect from 1 April, 2023.
News Bills
Show AI Summary
Combining provisional and regular registration allows direct regular approval for active trusts, streamlining application and approval processes.
Amendments permit trusts and institutions that have already commenced activities to seek direct regular approval instead of provisional registration; such applications are to be examined by the Principal Commissioner or Commissioner under applicable procedures, and registration may be granted for a multi year term if the authority is satisfied about objects, genuineness and statutory compliance, with the authority required to pass an order granting or rejecting the application within the prescribed decision period from receipt.
News Bills
Show AI Summary
Roll-back provisions removed from section 12A(2), eliminating retrospective exemption and reassessment protection after later registration.
The Finance Bill proposes to omit the second, third and fourth provisos to section 12A(2), which previously permitted retrospective application of sections 11 and 12 and barred reassessment under section 147 for certain prior years upon later registration; these provisos are deemed redundant after 2020 amendments requiring provisional registration before commencing activities, and the omission takes effect from 1st April, 2023.
News Bills
Show AI Summary
Application of donations between trusts: inter trust transfers now count only partially as charitable application under the amendment.
The Finance Bill restricts treatment of donations from one eligible trust or institution to another by providing that amounts credited or paid to another eligible fund, trust or institution or to a trust registered under the registration provision will be treated as application for charitable or religious purposes only to the extent specified in newly inserted explanatory clauses to the income exemption and income application provisions; the measure aims to prevent layered accumulation through multi stage donations and preserves the non corpus requirement for such transfers.

TMI Notes

Back

All TMI Notes

Showing Results for :
Reset Filters
No Records Found

TMI Notes

Back

All TMI Notes

Simplified Rent Deduction Mechanism for Non-HRA Assessees : Clause 134 of the Income Tax Bill, 2025 Vs. Section 80GG of the Income-tax Act, 1961

16 April, 2025

Contents
Acts
Rules & Regulations
Summary
Note

Note

-

Bookmark

Print

Print

Clause 134 Deductions in respect of rents paid.

Income Tax Bill, 2025

Introduction

Clause 134 of the Income Tax Bill, 2025, proposes to provide deductions in respect of rent paid by an individual assessee for accommodation occupied for the purpose of his or her own residence. This provision, which closely mirrors the existing Section 80GG of the Income-tax Act, 1961, is a crucial statutory mechanism for providing relief to individuals who do not receive house rent allowance (HRA) and yet incur substantial expenditure on rent. The provision operates within the broader legislative framework of deductions under the income tax law, aiming to ensure equity among taxpayers who bear out-of-pocket housing costs. The implementation of Clause 134 is expected to have wide-reaching implications for salaried and self-employed individuals, particularly those residing in urban areas with high rental costs. The provision is also to be read in conjunction with the relevant rules, notably Rule 11B of the Income-tax Rules, 1962, which prescribes procedural compliance for availing such deduction.

Objective and Purpose

The legislative intent behind Clause 134, much like its predecessor Section 80GG, is to extend tax relief to individuals who incur rental costs for their personal residence but are not in receipt of HRA, a common component of salary packages in India. The provision seeks to address the disparity between salaried employees receiving HRA exemptions u/s 10(13A) and those who, due to the nature of their employment or business, do not receive such benefits. The policy rationale is grounded in the principle of horizontal equity, ensuring that similarly situated taxpayers, in terms of housing expenditure, are treated alike for tax purposes. The historical background of this provision reflects the legislature's recognition of rising urban housing costs and the need to provide targeted relief to taxpayers who shoulder these expenses directly.

Detailed Analysis of Clause 134 of the Income Tax Bill, 2025

1. Scope of Deduction 

Clause 134(1) establishes the foundational rule: in computing total income, any expenditure incurred by an assessee towards payment of rent for any furnished or unfurnished accommodation occupied for the purposes of his own residence shall be deducted, subject to other provisions of the section. The scope is restricted to individuals (as the language and context suggest), and the deduction is available only in respect of accommodation used for the taxpayer's own residence, not for let-out or business purposes.

The phrase "by whatever name called" ensures that the nature of the payment-whether termed rent, lease, or license fee-does not affect eligibility, provided the payment is for residential accommodation. The provision is neutral as to the form of accommodation (furnished or unfurnished), thus providing broad coverage.

2. Quantum and Limits of Deduction 

Clause 134(2) prescribes the manner of computing the deduction:

  • The deduction is allowable only on rent paid exceeding 10% of total income.
  • The maximum deduction is capped at the lower of:
    • Five thousand rupees per month (i.e. Rs. 60,000 per annum), or
    • 25% of total income for the tax year.

This formula is designed to ensure that only substantial rent payments relative to the taxpayer's income are eligible for deduction, and to prevent excessive claims. The "whichever is less" criterion ensures that the deduction is always within reasonable bounds, regardless of the quantum of rent paid or the taxpayer's income level.

3. Prescribed Conditions and Limitations 

Clause 134(3) authorizes the prescription of additional conditions or limitations, having regard to the area or place in which the accommodation is situated and other relevant considerations. This sub-section provides delegated legislative power to the Central Board of Direct Taxes (CBDT) to frame rules that may, for example, specify different limits for metropolitan and non-metropolitan areas, or impose procedural requirements.

This flexibility is crucial for adapting the deduction regime to changing economic conditions, regional disparities in rental markets, and policy objectives.

4. Exclusions from Deduction 

Clause 134(4) sets out specific situations where no deduction shall be allowed:

  • (a) Where any residential accommodation is:
    • (i) Owned by the assessee, spouse, minor child, or, in the case of a Hindu Undivided Family (HUF), by such family at the place where the assessee ordinarily resides or performs duties of his office or employment or carries on business or profession;
    • (ii) Owned by the assessee at any other place, being accommodation in the occupation of the assessee, the value of which is to be determined u/s 21(6) or (7)(a).
  • (b) Where the assessee has any income falling in Schedule III (Table: Sl. No. 11).

The rationale is to prevent double benefits-i.e., claiming deduction for rent paid while also owning residential property at the same place or elsewhere (if self-occupied). The reference to Schedule III is a new legislative device, the details of which would require examination of the Bill's Schedules.

5. Explanation of "Total Income" 

Clause 134(5) clarifies that "10% of his total income" and "25% of his total income" mean the respective percentages of total income before allowing deduction under this section. This ensures that the computation of the threshold (10%) and the cap (25%) is made on the gross total income, preventing circularity in deduction calculation.

6. Procedural Aspects and Compliance

While Clause 134 itself does not prescribe procedural requirements, sub-section (3) contemplates the prescription of such conditions by rules. Historically, such conditions have included the filing of a declaration (Form 10BA) u/r 11B. It is anticipated that similar or additional compliance requirements may be prescribed under the new regime.

Practical Implications

The practical impact of Clause 134 is significant for individuals who do not receive HRA, such as self-employed professionals, businesspersons, and certain salaried employees. The provision provides a modest but meaningful deduction, particularly for middle-income taxpayers residing in urban areas with high rent-to-income ratios. The cap of Rs. 5,000 per month, however, may be viewed as insufficient in metropolitan cities where average rents are substantially higher.

From a compliance perspective, taxpayers must ensure that they do not own any residential property at the relevant locations, and must be prepared to substantiate their claim through appropriate documentation, potentially including a declaration in prescribed form and evidence of rent payments. The possibility of additional conditions being prescribed by rules introduces an element of uncertainty, which will need to be monitored as the Bill is implemented.

For the tax administration, the provision requires robust mechanisms for verification and enforcement, particularly to prevent abuse through false claims or misrepresentation of ownership status.

Comparative Analysis with Section 80GG of the Income-tax Act, 1961

1. Structure and Language

Clause 134 is structurally and substantively similar to Section 80GG. Both provisions grant a deduction for rent paid for personal residence, subject to specified limits and conditions. The language of Clause 134 largely mirrors that of Section 80GG, with only minor variations in drafting style and references to other provisions (e.g., "Schedule III" in Clause 134 vs. "clause (13A) of section 10" in Section 80GG).

2. Eligibility Criteria

Section 80GG: Excludes assessees having income falling within clause (13A) of section 10 (i.e., those receiving HRA exempt u/s 10(13A)).
Clause 134: Instead of explicit reference to section 10(13A), Clause 134(b) refers to "income falling in Schedule III (Table: Sl. No. 11)," which presumably serves a similar exclusionary function. The effect is to prevent overlap between HRA exemption and rent deduction.

3. Limits of Deduction

Both provisions set the deduction as the least of:

  • Rent paid minus 10% of total income,
  • Rs. 5,000 per month, or
  • 25% of total income.

The computation methodology is identical, as is the reference to total income before deduction under the section.

4. Exclusions Based on Ownership

Both Clause 134 and Section 80GG disallow deduction where the assessee, spouse, minor child, or HUF owns residential accommodation at the place of residence or employment/business. Both also disallow deduction where the assessee owns any other accommodation that is self-occupied and whose value is determined under the relevant provisions (section 21(6) or (7)(a) in Clause 134; section 23(2)(a) or (4)(a) in Section 80GG).

5. Prescribed Conditions

Both provisions empower the prescription of further conditions or limitations by rules, particularly having regard to the area or place in which the accommodation is situated. This allows for flexibility and adaptation to changing circumstances.

6. Differences and Points of Note

  • Reference to Schedule III: Clause 134 introduces a reference to Schedule III (Table: Sl. No. 11) for exclusion, whereas Section 80GG refers directly to section 10(13A). The practical effect will depend on the content of Schedule III in the new law.
  • Delegated Legislation: Both provisions contemplate further conditions by rules, but Clause 134's language is broader and may allow more extensive regulatory intervention.
  • Terminology for Self-Occupied Property: The cross-referencing to sections for valuation of self-occupied property differs due to the reorganization of sections in the new Bill.
  • Procedural Requirements: Section 80GG, read with Rule 11B, requires filing of Form 10BA. Clause 134 does not specify this, but sub-section (3) allows for similar requirements to be prescribed.

Comparative Analysis with Rule 11B of the Income-tax Rules, 1962

1. Procedural Compliance

Rule 11B stipulates that the deduction u/s 80GG shall be allowed only if the assessee files a declaration in Form 10BA. This form requires the taxpayer to declare, inter alia, that he/she does not own any residential accommodation at the relevant location, does not receive HRA, and has paid rent for residential accommodation occupied for his/her own residence.

Clause 134 does not itself specify any procedural requirement but, as per sub-section (3), allows for the prescription of such conditions by rules. It is reasonable to expect that, upon notification of the relevant rules under the 2025 Act, a similar requirement for a declaration (possibly in a revised or renamed form) will be instituted.

2. Substantive vs. Procedural Law

Section 80GG and Clause 134 provide the substantive right to deduction, while Rule 11B operationalizes the provision by imposing procedural compliance. The interplay between substantive and procedural law is essential to ensure both the integrity of the deduction regime and administrative feasibility.

The requirement of a declaration serves as a deterrent against fraudulent claims and as an aid to tax authorities in verification and enforcement.

3. Enforcement and Compliance Burden

From a taxpayer's perspective, the requirement to file a declaration (and possibly furnish supporting documents) increases the compliance burden, particularly for self-employed individuals and those without formal rental agreements. However, this is a necessary trade-off to prevent abuse of the deduction.

For tax administrators, the declaration provides a basis for scrutiny, but also necessitates the development of systems to process and verify such declarations efficiently.

4. Anticipated Changes under the 2025 Bill

Given the continuity in legislative approach, it is likely that rules analogous to Rule 11B will be framed under the new law, possibly updated to reflect contemporary administrative practices (e.g., e-filing, digital verification).

Conclusion

Clause 134 of the Income Tax Bill, 2025, represents a continuation of the policy and structure of Section 80GG of the Income-tax Act, 1961, providing targeted relief to individuals who incur rental expenditure for their own residence without receiving HRA. The provision is well-calibrated to balance the need for relief with safeguards against abuse, through carefully crafted eligibility criteria, monetary limits, and the potential for further conditions through subordinate legislation.

The principal areas for possible reform or clarification include the adequacy of the monetary cap in light of rising urban rents, the clarity of exclusion criteria (particularly the reference to Schedule III), and the streamlining of procedural requirements to minimize taxpayer burden while ensuring effective enforcement. Judicial clarification may be required in cases of ambiguity, particularly regarding the interpretation of "owning" residential accommodation and the interaction with other provisions of the Act.

As the new law is implemented, it will be important for both taxpayers and tax administrators to remain vigilant regarding the rules and compliance requirements, and for the legislature to periodically review the efficacy and adequacy of the deduction in light of changing economic realities.


Full Text:

Clause 134 Deductions in respect of rents paid.

Topics

Acts Income Tax