TaxSaral
Section 134Deductionswas Section 80GG in IT Act 1961

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 this 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

1

Freelancer claiming rent deduction

Scenario

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

Calculation

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

Schedule IIIHRA Exemption
Section 123Investments & Insurance Premium (₹1.5L limit)

Still have questions about Section 134?

Our tax team can explain how this provision applies to your specific situation.

Ask our tax teamBrowse all sections

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