Introduction
Are you a working professional, self-employed individual, or landlord looking for clarity on house rent deductions under the Income Tax Act? If yes, you’ve come to the right place.
In this article, we’ll cover everything you need to know about Section 80GG of the Income Tax Act, 1961, which allows individuals who do not receive House Rent Allowance (HRA) from their employer to claim a deduction for rent paid.
If you do receive HRA, the relevant provision is Section 10(13A). For more details, you can check my previous blog.
What is Section 80GG?
Eligibility Criteria for Section 80GG
- Applicable to self-employed individuals and salaried employees not receiving HRA.
- You, your spouse, minor child, or HUF of which you are a member must not own any residential accommodation in the city where you live, work, or carry out business.
- If annual rent exceeds ₹1 lakh, you must submit the landlord’s PAN.
- Form 10BA must be filed to declare rent payments.
- Deduction is allowed for any type of residential property (furnished, semi-furnished, or unfurnished).
- No deduction is available if you own a self-occupied property elsewhere.
- You cannot claim this deduction if you have claimed HRA during the financial year (even if from a previous employer).
How is Deduction Under Section 80GG Calculated?
- ₹5,000 per month (₹60,000 per year)
- 25% of adjusted total income
- Actual rent paid minus 10% of adjusted total income
Step-by-Step Guide: HRA vs Section 80GG Eligibility
- Yes → You may claim exemption under Section 10(13A).
- No → Go to Step 2.
- Yes → You may claim deduction under Section 80GG.
- No → Not eligible for rent deduction.
- Ensure you (or your spouse/minor child/HUF) do not own residential property in the city where you live or work.
- File Form 10BA to claim the deduction.
- Deduction will be the least of:
- ₹5,000 per month (₹60,000 annually)
- 25% of Adjusted Total Income
- Rent paid – 10% of Adjusted Total Income
Example Calculation
|
Particulars |
Individual
A |
Individual
B |
|
Adjusted
Total Income (ATI) |
₹2,00,000 |
₹1,80,000 |
|
Total Yearly
Rent Paid |
₹80,000 |
₹60,000 |
|
Rent – 10% of
ATI |
₹60,000 |
₹42,000 |
|
25% of ATI |
₹50,000 |
₹45,000 |
|
₹5,000 per
month |
₹60,000 |
₹60,000 |
|
Deduction
Applicable (Least Value) |
₹50,000 |
₹42,000 |
What is Adjusted Total Income (ATI)?
What is Form 10BA?
- Do not own any residential property.
- Are paying rent for the accommodation.
- Are not claiming deduction for self-occupied property anywhere else.
Details required in Form 10BA:
- Name and PAN of the assessee
- Address of the assessee
- Tenure and rent amount paid
- Payment mode (cash, cheque, transfer, etc.)
- Name and address of the landlord
- Landlord’s PAN (mandatory if rent > ₹1 lakh)
Difference Between HRA (Section 10(13A)) and Section 80GG
|
Feature /
Criteria |
HRA –
Section 10(13A) |
Section
80GG |
|
Eligibility |
Salaried
individuals who receive HRA as part of their salary. |
Salaried
(without HRA) and self-employed individuals. |
|
Property
Ownership |
Allowed even
if the individual owns a house (but not in the city of residence). |
Not allowed
if the assessee, spouse, minor child, or HUF owns a residential property in
the city of residence. |
|
Form
Required |
No additional
form required. |
Mandatory
submission of Form 10BA. |
|
Calculation
Method |
Exemption is
the least of: • Actual HRA received • 50% of salary (metro cities) or 40%
(non-metro) • Rent paid – 10% of salary |
Deduction is
the least of: • ₹5,000 per month (₹60,000 yearly) • 25% of Adjusted Total
Income • Rent paid – 10% of Adjusted Total Income |
|
Maximum
Deduction |
Depends on
salary and HRA received; no fixed ceiling. |
₹60,000 per
annum (fixed upper limit). |
|
Applicability |
Only for
salaried individuals with HRA in their salary structure. |
Applicable to
both salaried (without HRA) and self-employed taxpayers. |
Section 80GG Deduction Calculator
For individuals not receiving HRA. Deduction is the least of: ₹5,000 × eligible months, 25% of total income*, or (Rent − 10% of total income*).
*Total income for 80GG excludes LTCG, 111A gains, 115A income and deductions under 80C–80U except 80GG.
Conclusion
- ₹60,000 per year
- 25% of adjusted total income
- Rent paid minus 10% of adjusted total income
FAQ's
I own a house in another city but live in a rented house for work. Can I claim deduction under Section 80GG?
Yes, as long as you do not own a property in the city where you live or work.
Can self-employed individuals claim this deduction?
Yes, they can claim the deduction if they pay rent.
What is the maximum deduction under Section 80GG?
Up to ₹60,000 per year.
Can I claim both HRA and 80GG?
No. Section 80GG applies only if you do not receive HRA at all during the financial year.
What is adjusted total income under 80GG?
It is Gross Total Income reduced by certain exemptions and deductions (except 80GG).
