Chapter VIII - Deductions to be Made in Computing Total Income
Section 134
Section 134: deduction for rent paid (when you don't get HRA)
Section 134 is the Income-tax Act, 2025's version of the deduction long known as "80GG" - for taxpayers who pay rent for their own home but don't receive a house rent allowance from an employer (for example, the self-employed, or salaried individuals whose pay structure has no HRA component).
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Need advice on Section 134?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) In computing the total income of an assessee, subject to other provisions of this section, there shall be deducted any expenditure incurred by him 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.
(2) The deduction under sub-section (1) shall be allowable on payment of such rent exceeding 10% of his total income, subject to a maximum of ₹ 5000 per month, or 25% of total income for tax year, whichever is less.
(3) For the purposes of deduction under sub-section (1), such other conditions or limitations having regard to the area or place in which such accommodation is situated and other relevant consideration, as may be prescribed, shall be taken into account.
(4) No deduction under this section shall be allowed to an assessee in any case, where— (a) any residential accommodation is— (i) owned by the assessee or by his spouse or minor child or, where such assessee is a member of a Hindu undivided family, by such family at the place where he ordinarily resides or performs duties of his office or employment or carries on his business or profession; or (ii) owned by the assessee at any other place, being accommodation in the occupation of the assessee, the value of which is to be determined under section 21(6) or (7)(a); or (b) the assessee has any income falling in Schedule III (Table: Sl. No. 11).
(5) For the purposes of this section, the expressions “10% of his total income” and “25% of his total income” shall mean 10% or 25%, as the case may be, of the total income of the assessee before allowing deduction for any expenditure under this section.
Introduction
Section 134 permits a deduction for rent paid for the taxpayer's own residence when the statutory income test is met. The amount is limited by rent above 10% of income, ₹5,000 per month and 25% of income, and property ownership or specified income can disqualify the claim.
Key takeaways
Rent for own residence
The deduction covers rent paid for accommodation occupied as the claimant’s residence, subject to the section’s ownership and income exclusions.
Amount
Only rent exceeding 10% of total income is considered, capped by ₹5,000 per month or 25% of total income for the tax year, whichever is less.
How much can be deducted
The deduction is the least of the following three amounts:
- ₹5,000 per month (₹60,000 a year)
- 25% of the assessee's total income for the tax year
- Actual rent paid, minus 10% of total income
When the deduction is not available
Section 134(4) blocks the deduction in either of these situations:
- The assessee, their spouse or minor child (or, for an HUF, the family) owns residential accommodation at the place where the assessee lives, works, or carries on business or profession.
- The assessee owns residential accommodation at any other place and that property's value would be assessed as a self-occupied or deemed-let-out property under Section 21(6) or (7)(a).
- The assessee already has income that falls under the house-rent-allowance category listed in Schedule III (i.e., someone who does receive HRA cannot also claim this deduction).
Other conditions
The 10%/25% of total income referred to above is computed on income before allowing the Section 134 deduction itself - not after.
The accommodation can be furnished or unfurnished, and the deduction applies regardless of what the payment is called, as long as it is, in substance, rent for the assessee's own residence.
Further conditions relating to the area or location of the accommodation may be prescribed separately.
Step-by-step flow for applying Section 134
- 1
Is rent paid for accommodation occupied for your own residence?
Section 134(1) covers rent (by whatever name called) for furnished or unfurnished accommodation occupied for the assessee's own residence.
- No: No deduction under Section 134.
- Yes: Go to the next step.
- 2
Does any Section 134(4) exclusion apply?
Exclusions: residential accommodation owned by you, your spouse or minor child (or the HUF) at the place where you ordinarily reside, work or carry on business; accommodation you own elsewhere whose value is determined under Section 21(6) or (7)(a); or income falling in Schedule III (Table: Sl. No. 11).
- Yes: No deduction under Section 134.
- No: Go to the next step.
- 3
Work out total income before this deduction
Section 134(5): the 10% and 25% tests use total income before allowing the Section 134 deduction itself.
- 4
Take the least of the three limits
Rent paid minus 10% of total income; ₹5,000 per month; 25% of total income for the tax year. Also apply any conditions prescribed under Section 134(3) for the area or place of the accommodation.
Practical checklist
Do
- Keep rent receipts, tenancy records and a calculation of the three competing limits.
- Check accommodation owned by the assessee, spouse, minor child or HUF at the relevant place and the other statutory exclusions.
Avoid
- Do not claim the full rent without subtracting 10% of total income and applying both caps.
- Do not claim if the disqualifying residential ownership or specified income condition applies.
Illustrative example
Worked example: rent deduction for a self-employed consultant
Hypothetical facts (illustration only, not a real taxpayer): Ms. Iyer, a self-employed consultant, pays rent of ₹12,000 a month for all 12 months of the tax year for the flat she lives in. She receives no house rent allowance and neither she, her spouse nor her minor child owns a house where she lives or works. Her total income before the Section 134 deduction is ₹4,80,000 (assumed).
Rent paid minus 10% of total income
Rent paid ₹1,44,000 (₹12,000 x 12) minus 10% of ₹4,80,000 (₹48,000) = ₹96,000.
Monthly cap
₹5,000 x 12 months = ₹60,000.
25% of total income
25% of ₹4,80,000 = ₹1,20,000.
Least of the three
The least of ₹96,000, ₹60,000 and ₹1,20,000 is ₹60,000.
Outcome
- Ms. Iyer's Section 134 deduction is ₹60,000, subject to any conditions prescribed under Section 134(3).
- If she later bought a flat in the same city, Section 134(4)(a)(i) would bar the deduction for that period's rent.
Glossary
- Own residence
- Accommodation actually occupied by the claimant for residential use.
- Rent threshold
- The requirement that rent exceeds 10% of total income before the deduction can arise.
Frequently asked questions
Is Section 134 the same deduction as "80GG"?
Yes, in substance - a deduction for rent paid when no house rent allowance is received - but it is now numbered Section 134 under the Income-tax Act, 2025.
Can I claim this if I receive HRA from my employer?
No. Section 134(4)(b) specifically excludes anyone who has income falling under the HRA category in Schedule III - this deduction is only for those who receive no HRA at all.
What is the maximum I can deduct under Section 134?
The least of ₹5,000 per month, 25% of your total income for the year, or actual rent paid minus 10% of your total income.
Can I claim this deduction if I own a house in another city?
It depends. If you own residential accommodation in another place that would be valued as self-occupied or deemed let out under Section 21(6) or (7)(a), you cannot claim the Section 134 deduction for rent paid at your place of work or residence.
Need help applying this provision to your situation?
Check your Section 134 rent deduction eligibility with our tax teamLast updated 10 October 2026