All About the New House Rent Rules Applicable From July 2025 (Complete Guide)

India’s rental market is undergoing a major transformation.
Starting July 2025, several new rental rules will be implemented across states based on:

• Revised Model Tenancy Act (MTA) adoption

• Introduction of Digital Rent Registry (DRR)

• PAN–Aadhaar linked rent agreement validation

• Updated rent reporting standards for tax filing

• Streamlined rules for security deposits, eviction, and rent increases

These changes aim to make renting transparent, digital, and standardized.

This blog covers all new rules, their tax impact, and how landlords/tenants must comply.

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🏛 1. Digital Rent Registry (DRR) Mandatory From July 2025

From July 2025, every rent agreement must be digitally registered with the state’s Digital Rent Registry portal.

What does this mean?

✔ Mandatory online rent agreement submission
✔ Upload Aadhaar/PAN of landlord & tenant
✔ Upload property details + monthly rent
✔ Unique DRR Registration Number generated
✔ This number will be required for:

• ITR proof of rent paid

• HRA claim

• Property tax filings

• TDS reporting (if applicable)

Why it matters?

• No fake rent receipts

• Transparent records

• Helpful for tax claims

Internal link:
👉 Claiming HRA & House Rent Income

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🧾 2. New Rules for Rent Agreements (2025 Standard)

All rent agreements must now include:

✔ Rent amount + annual increase
✔ Security deposit limit
✔ Maintenance responsibilities
✔ Minimum notice period
✔ Eviction terms
✔ DRR number
✔ PAN & Aadhaar of parties

Handwritten agreements or unregistered agreements won’t be considered valid for:

• HRA claims

• Rental income declaration

• Legal disputes

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💰 3. New Limit on Security Deposit (Pan-India Standardization)

From July 2025, security deposit caps will apply:

Landlords cannot demand higher deposits unless mutually agreed & documented.

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📈 4. Rent Increase Rules (Standardized From July 2025)

Rent hikes must follow pre-agreed percentages:

• Default cap: 5% increase per year

• Higher only if stated in agreement

• Notice period: 90 days mandatory

Sudden rent hikes without proper notice are no longer enforceable.

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👨‍⚖️ 5. Updated Eviction Rules

Eviction will only be allowed under:

✔ Non-payment of rent (2 months)
✔ Illegal activities
✔ Misuse of property
✔ Structural damage
✔ Landlord needing property for self-use

Eviction process will move to Rent Courts and must follow a 60–120 day timeline.

No arbitrary evictions allowed.

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🏚 6. Landlord Responsibilities (2025 Rules)

• Structural repairs

• Plumbing & electrical safety

• Regular maintenance of building

• Digital registration of agreement

• Provide rent receipts OR enable online payment tracking

Failure may lead to penalties under MTA.

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🧑‍🦱 7. Tenant Responsibilities

• Pay rent on or before the due date

• Maintain property in good condition

• No structural changes without permission

• No subletting unless stated in agreement

• Provide KYC documents for DRR

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🧮 8. TDS Rules on Rent (Updated for July 2025)

✔ Section 194I: Rent Paid by Businesses

TDS = 10% if annual rent > ₹2,40,000

✔ Section 194IB: Rent Paid by Individuals (Non-audit cases)

If monthly rent exceeds ₹75,000, tenant must deduct:

TDS @ 5%
(one-time deduction during the year)

✔ New Rule (from July 2025):

DRR Number must be quoted in:

• 26QC challan

• Form 16C

• ITR of landlord

This is to prevent false rent claims.

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🧮 9. Tax Implications for Landlords (2025 Rules)

Rental income is taxed under Income from House Property.

Deductions:

✔ Standard Deduction 30%
✔ Municipal Taxes
✔ Interest on Home Loan u/s 24(b)
✔ Joint ownership splitting

New Rule:

HRA claims by tenants and rent received by owners will be digitally matched by the ITD using DRR.

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💸 10. Tax Benefits for Tenants (HRA)

To claim HRA, tenants must provide:

✔ DRR number
✔ Registered rent agreement
✔ Online rent payment proof
✔ PAN of landlord

Fake rent receipts will not be accepted after July 2025.

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🧠 11. Biggest Practical Changes to Expect

✔ No fake rent agreements

✔ No cash rent without bank trail

✔ HRA and rent income cross-checking

✔ Police verification becomes digital

✔ Eviction becomes faster and formal

✔ Lower security deposits will reduce entry cost

✔ Annual rent increase will be predictable

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📊 Example – Effect of New Rules

Old System:
Landlord demands 10 months’ deposit for a ₹20,000 home = ₹2,00,000

New 2025 Rule:
Only 2–3 months allowed = ₹40,000–₹60,000

Huge benefit for tenants.

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AQs — New Rent Rules India 2025

Q1: Are these rent rules applicable nationwide?
States must adopt MTA rules — most major states are implementing from July 2025.

Q2: Is rent agreement registration compulsory?
Yes, digital registration under DRR is mandatory.

Q3: Can landlords still raise rent arbitrarily?
No. Increase must follow agreed rate; default cap = 5%.

Q4: Will HRA claims be affected?
Yes — DRR-based verification will prevent fraudulent claims.

Q5: Do NRIs renting property need to follow these rules?
Yes, including DRR and TDS provisions.

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