Form 31 — House Rent Deduction Declaration Under Section 134 Explained

The deduction for rent paid under section 134 of the Income-tax Act, 2025 provides relief to individuals who do not own residential accommodation and incur expenditure on rent. This deduction is particularly beneficial for employees and self-employed individuals living in rented premises. Form 31 is the declaration form required for claiming this deduction, with specific evidence requirements to support the claim.

Overview of Section 134

Statutory Provision

Section 134 provides for deduction of expenditure incurred by an individual towards payment of rent (by whatever name called) in respect of any furnished or unfurnished accommodation occupied by him for the purposes of his own residence.

Eligibility

• The assessee must be an individual
• The accommodation must be occupied for the purpose of own residence
• The rent must be paid during the tax year

Quantum of Deduction

The deduction is the lower of:

• Rent paid exceeding 10% of total income
• Rs. 5,000 per month (Rs. 60,000 per year) or 25% of total income, whichever is less

Conditions

• The assessee must not own any residential accommodation at the place of residence
• The assessee must not have any income falling in Schedule III (Table: Sl. No. 11) (House Rent Allowance)
• The deduction is subject to certain limitations based on area or place of residence

Exclusions

Deduction is not allowed if:

• The assessee owns a residential accommodation at the place where he ordinarily resides or performs duties
• The assessee owns a residential accommodation at any other place, the value of which is determined under section 21(6) or (7)(a)
• The assessee has income from House Rent Allowance (Schedule III, Table: Sl. No. 11)

Form 31 — Declaration for House Rent Deduction

Purpose

Form 31 is the declaration to be filed by the assessee claiming deduction under section 134. It contains the details of the rent paid, the landlord, and the accommodation.

Filing Details

To Whom

• Assessing Officer having jurisdiction over the assessee

Timing

• To be filed with the return of income for the tax year

Mode

• Electronic filing as specified by the Principal Director General of Income-tax (Systems)

Verification

• By the assessee (or person authorised to verify the return)

Line-by-Line Explanation

Part I: Basic Information

1. Name of the Assessee

   • Full legal name of the individual claiming the deduction

2. Permanent Account Number (PAN)

   • PAN of the assessee

3. Address

   • Residential address of the assessee

4. Tax Year

   • The tax year for which the deduction is claimed

Part II: Details of Accommodation

5. Address of Accommodation

   • Full address of the rented accommodation
   • Should be the place of residence

6. Nature of Accommodation

   • Furnished or unfurnished
   • Type (flat, house, room, etc.)

7. Period of Occupation

   • Period during which the accommodation was occupied during the tax year
   • From date to date

8. Name of the Landlord

   • Full name of the landlord or owner of the accommodation

9. PAN of the Landlord

   • PAN of the landlord (if available)
   • If the landlord does not have a PAN, provide a declaration

10. Address of the Landlord

    • Complete address of the landlord

11. Relationship with the Landlord

    • Whether the landlord is a relative
    • If so, the nature of relationship

Part III: Rent Details

12. Monthly Rent

    • Rent per month
    • The amount paid during the tax year

13. Total Rent Paid

    • Total rent paid during the tax year
    • Rent for the period of occupation

14. Mode of Payment

    • Whether rent was paid by cheque, draft, electronic transfer, or cash
    • For rent exceeding Rs. 1,00,000 per year, payment must be by cheque or electronic mode

15. Date of Payment

    • Dates on which rent was paid

16. Whether Rent Receipts are Available

    • Yes/No
    • Rent receipts must be maintained

Part IV: Declaration

17. Declaration

    • That the accommodation is occupied for own residence
    • That the assessee does not own any residential accommodation at the place of residence
    • That the assessee does not have any income from House Rent Allowance
    • That the rent has been paid
    • That the rent receipts are available

18. Signature and Date

    • Signature of the assessee
    • Date of signing

Evidence Requirements

Rent Receipts

The assessee must maintain rent receipts for the entire period of occupation. The rent receipts should contain:

• Name and address of the landlord
• Name and address of the tenant
• Address of the rented accommodation
• Amount of rent paid
• Month for which rent is paid
• Date of payment
• Signature of the landlord

Landlord's PAN

If the aggregate rent paid during the tax year exceeds Rs. 1,00,000, the assessee must:

• Obtain the PAN of the landlord
• Furnish the PAN in Form 31

If the landlord does not have a PAN, a declaration to that effect must be furnished.

Proof of Payment

For rent exceeding Rs. 1,00,000 per year, payment must be made by cheque, bank draft, or electronic transfer. Cash payments are not allowed for the deduction.

Relationship with Landlord

If the landlord is a relative, the assessee must disclose the relationship. The rent paid to a relative must be at a reasonable amount, not excessive.

Practical Considerations

Calculation of Deduction

Step 1: Calculate the total income of the assessee before allowing deduction for rent.

Step 2: Calculate 10% of total income.

Step 3: Calculate the excess of rent paid over 10% of total income.

Step 4: Calculate the maximum deduction:

• Rs. 5,000 per month (Rs. 60,000 per year) or
• 25% of total income, whichever is less

Step 5: The deduction is the lower of Step 3 and Step 4.

Example

• Total income: Rs. 5,00,000
• Rent paid: Rs. 10,000 per month (Rs. 1,20,000 per year)
• 10% of total income: Rs. 50,000
• Excess rent: Rs. 70,000 (Rs. 1,20,000 - Rs. 50,000)
• Maximum deduction: Lower of Rs. 60,000 (Rs. 5,000 per month) or Rs. 1,25,000 (25% of Rs. 5,00,000) = Rs. 60,000
• Deduction: Rs. 60,000

Documentation

• Rent receipts for all months
• Rent agreement (if available)
• PAN of the landlord (if rent exceeds Rs. 1,00,000)
• Proof of payment (bank statements, cheque copies, etc.)

Self-Occupied Property

If the assessee owns a property but it is not self-occupied (e.g., let out), the deduction may still be available. The assessee must demonstrate that the rented accommodation is occupied for own residence.

Common Mistakes

1. Incomplete Rent Receipts

   • Rent receipts without necessary details
   • Missing landlord's signature

2. Failure to Obtain Landlord's PAN

   • If rent exceeds Rs. 1,00,000, PAN is mandatory
   • Non-compliance may lead to disallowance

3. Cash Payments

   • Rent paid in cash exceeding Rs. 1,00,000 is not allowed

4. Incorrect Calculation of Deduction

   • Not correctly calculating 10% of total income
   • Not applying the Rs. 5,000 per month limit

5. Failure to File Form 31

   • Form 31 must be filed with the return

Penalties for Non-Compliance

• Incorrect claim: Penalty under section 439 (under-reporting/misreporting)
• Failure to maintain records: Penalty under section 441

Expert Advisory

Given the complexity of the deduction and the evidence requirements, professional advisory is useful. Anuj Desai & Associates provides comprehensive services for house rent deduction, including:

• Eligibility Assessment: Determining eligibility for the deduction
• Calculation: Assistance with calculation of the deduction
• Documentation: Assistance with rent receipts and other evidence
• Form 31 Preparation: Preparation of Form 31
• Compliance Review: Review of compliance with section 134

With deep expertise in deduction provisions, Anuj Desai & Associates ensures that your house rent deduction claim is accurate and compliant.

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Need expert assistance with house rent deduction or Form 31? Contact Anuj Desai & Associates today for comprehensive advisory, preparation, and compliance services. [Contact Us] to schedule a consultation.