TaxSaral

Section 134 · was Section 80GG in the 1961 Act

Rent Paid (No HRA received)

Deduction for rent paid when you do not receive HRA from your employer. Limited to the least of: ₹5,000/month, 25% of total income, or actual rent minus 10% of total income.

Who it applies to: Self-employed individuals, freelancers, or salaried people who do not receive HRA as part of their salary.

Key points

  • You must not own any residential property at the place where you live or work.
  • Maximum deduction: lowest of three limits — ₹5,000/month (₹60,000/year), 25% of total income, or actual rent minus 10% of total income.
  • You cannot claim both Section 134 and HRA exemption (Schedule III) simultaneously.
  • Not available under the default regime.

Worked example

Freelancer claiming rent deduction

Ritu is a freelance consultant with total income of ₹8L. She pays ₹12,000/month rent and does not own any property.

Limit 1: ₹5,000/month × 12 = ₹60,000/year
Limit 2: 25% of total income = 25% × ₹8,00,000 = ₹2,00,000
Limit 3: Actual rent – 10% of income = ₹1,44,000 – ₹80,000 = ₹64,000

Deduction = Lowest of the three = ₹60,000

Result: Ritu can deduct ₹60,000 (₹5,000/month limit is the binding constraint). Tax saved at 10% slab: ₹6,000. Despite paying ₹1.44L in rent, only ₹60K qualifies — this section is modest compared to HRA exemption.

Related sections

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Section references are based on the Income Tax Act 2025 (Tax Year 2026-27). Examples are illustrative; verify with a Chartered Accountant before filing.