New IT Act 2025 — Knowledge Bank

Deduction in respect of rent paid

Section 131 — Deduction in respect of rent paid

Old Act equivalent: Section 80GG of IT Act 1961 Sub-part: Deductions from total income

Statutory Text

  1. (1) An assessee, being an individual not eligible to claim deduction under section 130, shall be allowed a deduction of interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential house property, subject to a maximum limit of ` 150000 in a tax year and on fulfil ment of conditions specified in sub-section (2), for the tax year beginning on the 1st April, 2019 and subsequent tax years. (2) The conditions referred in sub-section (1) shall be the following:—

(a) the loan has been sanctioned by the financial institution during the period beginning on the 1st April, 2019 and ending on the 31st March, 2022;

(b) the stamp duty value of residential house property does not exceed forty-five lakh rupees; and

(c) the assessee does not own any residential house property on the date of sanction of loan. (3) Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other tax year. (4) For the purposes of this section, the expression “financial institution” shall have the meaning assigned to it in section 130(5)(a). Deduction in respect of purchase of electric vehicle.

Provisos

None.

Explanations

None.

Tables

None.

Key Structure

  • Applies to: Individual not eligible for HRA deduction under section 18(1)(b)
  • Conditions: Rent paid for own residence; no residential accommodation owned at place of employment; no accommodation owned by spouse or minor child at place of employment
  • Time limits: Rent paid during the tax year
  • Monetary limits: Least of: (a) rent paid minus 10% of total income, (b) 25% of total income, (c) Rs.5,000 per month
  • Exceptions: Not available if HRA exemption claimed; Form 10BA to be filed

Cross-References

  • Section 130

Amendment Notes

None noted from the extracted pages.

Practical Notes

  • Circular 1/2021
  • Circular 6/2023

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