Self-Employed HRA Framework
While HRA exemption under Section 10(13A) applies only to salaried individuals, self-employed professionals in India can claim rent deductions under:
- Section 80GG of Income Tax Act
- Applicable for freelancers, consultants, and business owners
- Maximum ₹5,000/month or 25% of income (whichever is lower)
Note: Maintain Form 10BA and rent receipts for 5 years
3 Critical Rules
No Employer HRA
Self-employed cannot receive HRA but can claim deductions
25% Income Cap
Deduction limited to 25% of total annual income
Rent Payment Proof
Mandatory documentation for claims exceeding ₹1 lakh/year
Required Documents
- Rent agreement with landlord details
- Bank transfer records for rent payments
- Form 10BA declaration
- Landlord's PAN (if rent >₹50,000/month)
Physical rent receipts required for cash payments
Real-Life Scenarios
Freelancer in Hyderabad
Annual Income: ₹7,50,000
Monthly Rent: ₹12,000
80GG Deduction: ₹4,800/month
Total Annual: ₹57,600
Consultant in Pune
Annual Income: ₹10,00,000
Monthly Rent: ₹18,000
80GG Deduction: ₹5,000/month
Total Annual: ₹60,000
Self-Employed vs Salaried
| Aspect | Salaried | Self-Employed |
|---|---|---|
| Exemption Basis | Section 10(13A) | Section 80GG |
| Maximum Deduction | 50%/40% of basic salary | ₹5,000/month or 25% income |
| Documentation | Rent receipts | Form 10BA + receipts |
Legal Considerations
- Deduction not allowed for owned properties
- Cannot claim if spouse owns the property
- Updated 2023 budget rules apply
- Joint rent agreements require special documentation
This content is for educational purposes only. Consult a tax professional for personalized advice.