How to Claim Rent Deduction If I Don’t Receive HRA?
- Rajesh Kumar Kar
- Mar 11
- 7 min read
Not receiving House Rent Allowance (HRA) as part of your salary doesn’t mean you miss out on Not receiving House Rent Allowance (HRA) as part of your salary doesn’t mean you miss out on tax benefits for rent payments. The Indian Income Tax Act provides a way for individuals—whether salaried or self-employed—to claim deductions on rent under Section 80GG. This section ensures that those who do not get HRA can still reduce their taxable income by claiming rent expenses.
However, there are specific eligibility conditions, limits on deductions, and a formal declaration process that taxpayers must follow. In this guide, we will explain how you can claim rent deduction under Section 80GG, the maximum amount you can claim, and the essential documentation required to ensure a smooth tax filing process.
Table of Contents
Understanding Section 80GG
What is Section 80GG?
of the Income Tax Act provides tax relief to individuals who pay rent for their residential accommodation but do not receive HRA. This deduction helps taxpayers lower their taxable income by claiming rent expenses, subject to certain conditions.
Who Can Benefit from Section 80GG?
Section 80GG applies to:
Salaried employees who do not receive HRA from their employer.
Self-employed individuals who do not have HRA as part of their income structure.
Unlike HRA, which is linked to an individual's salary, Section 80GG is available to all taxpayers who meet the eligibility conditions, regardless of whether they work in a salaried job or run their own business.
Eligibility Criteria for Claiming Rent Deduction
To claim a deduction under Section 80GG, you must fulfill the following conditions:
1. No House Rent Allowance (HRA) Received
You should not receive HRA as part of your salary. If you receive HRA from your employer, you cannot claim deductions under Section 80GG.
2. Must Be Paying Rent for a Residential Property
The deduction applies only if you pay rent for a residential accommodation where you live.
Rent paid for office or commercial space is not eligible.
3. No Ownership of Residential Property in the Same City
Neither you, your spouse, nor your minor children should own a residential property in the city where you reside and work.
If you or your family members own a house in another city, you can still claim this deduction, provided you are living on rent elsewhere.
4. Must Have an Income Source
You must have an income from salary, business, or profession to claim this deduction.
If you have no taxable income, you cannot avail of this benefit.
5. Mandatory Filing of Form 10BA
You need to file Form 10BA, which is a self-declaration stating that you have paid rent and meet all eligibility conditions.
This form requires details such as:
Your name and PAN/Aadhaar
Address of the rented accommodation
Duration of stay
Rent amount paid
Landlord’s name and PAN (if applicable)
Filing Form 10BA is compulsory before claiming the deduction in your Income Tax Return (ITR).
How Much Deduction Can You Claim?
The deduction under Section 80GG is subject to the lowest of the following three conditions:
₹5,000 per month (₹60,000 per year) – This is the maximum cap set by the Income Tax Act.
25% of gross total income – Your total income before deductions is considered, and the deduction cannot exceed 25% of this amount.
Actual rent paid minus 10% of total income – The deduction is calculated by subtracting 10% of total income from the actual rent paid.
Choosing the Best Deduction Method
To determine the best deduction amount:
Calculate all three limits based on your gross total income and rent paid.
The lowest of the three amounts will be the final deduction that you can claim under Section 80GG.
This deduction directly reduces your taxable income, leading to lower tax liability. Since the limit is relatively modest compared to HRA exemptions, it’s crucial to maximize benefits by ensuring accurate calculations and compliance.
Step-by-Step Process to Claim Rent Deduction
Step 1: Keep Necessary Documents
Although you don’t need to submit rent receipts or agreements while filing your ITR, it’s important to maintain these documents for verification if required by the tax department.
Documents to keep:
Rent receipts with details like landlord’s name, rent amount, and period covered.
Rental agreement as proof of tenancy.
Landlord’s PAN (if rent exceeds ₹1 lakh per year).
Step 2: File Form 10BA with Required Details
Before claiming the deduction, you must submit Form 10BA online through the Income Tax e-filing portal.
Details required in Form 10BA:
Name, PAN/Aadhaar of the tenant (you).
Address of the rented accommodation.
Rent amount paid and rental period.
Landlord’s name and PAN (if applicable).
Declaration confirming that no HRA has been received.
Step 3: Enter Deduction Details in Income Tax Return (ITR)
When filing your ITR, enter the final deduction amount calculated under Section 80GG in the relevant section.
Ensure that Form 10BA is filed before ITR submission to avoid rejection of your claim.
Important Considerations & Special Cases
Paying Rent to Parents: Can You Claim the Deduction?
Yes, you can claim rent deduction if you pay rent to your parents and meet the eligibility conditions.
However, your parents must declare this rent as income in their tax returns.
To strengthen your claim:
Ensure the payment is made via bank transfer instead of cash.
Maintain a proper rental agreement with your parents.
Limitations on Commercial Property Rent
Section 80GG applies only to residential properties where you live.
Rent paid for office spaces, co-working setups, or commercial establishments is not eligible for this deduction.
Impact of False Claims & Consequences
If you wrongly claim the deduction while receiving HRA or provide misleading information, the tax department may reject your claim and impose penalties.
To avoid legal consequences:
Cross-check your salary components before claiming.
File Form 10BA correctly with genuine details.
Keep supporting documents in case of future scrutiny.
Conclusion
Summary of Key Points
Section 80GG allows salaried and self-employed individuals without HRA to claim rent deduction.
The maximum deduction is limited to ₹5,000 per month, 25% of gross total income, or actual rent minus 10% of total income whichever is lower.
Form 10BA must be filed before claiming the deduction in your ITR.
Paying rent to parents is allowed, but they must declare it as income.
Only residential property rent qualifies for the deduction, not commercial spaces.
False claims can lead to penalties, so maintain proper documentation.
If you do not receive HRA but pay rent, Section 80GG provides a valuable tax-saving opportunity. By following the correct process, filing Form 10BA, and keeping records, you can maximize your tax benefits while ensuring compliance with tax laws.
FAQs
1. Who can claim rent deduction under Section 80GG?
Individuals who meet the following criteria can claim deductions under Section 80GG:
They do not receive House Rent Allowance (HRA) from their employer.
They pay rent for a residential property.
They, their spouse, or minor children do not own a residential property in the same city where they live and work.
They have an income from salary, business, or profession.
They submit Form 10BA, a self-declaration confirming rent payments.
2. What is Form 10BA, and why is it required?
Form 10BA is a declaration that confirms an individual is paying rent and is eligible for a deduction under Section 80GG. The form requires details like:
Name and PAN/Aadhaar of the tenant
Address of the rented property
Rent amount and period of tenancy
Landlord’s name and PAN (if rent exceeds ₹1 lakh per year)
Filing this form is mandatory to claim deductions under Section 80GG.
3. How is the maximum deduction calculated?
The maximum deduction under Section 80GG is the lowest of the following:
₹5,000 per month (₹60,000 per year).
25% of gross total income (before deductions).
Actual rent paid minus 10% of total income.
Taxpayers can claim the highest possible deduction based on these three conditions.
4. Can self-employed individuals claim this deduction?
Yes, self-employed individuals can claim rent deduction under Section 80GG, provided they meet the eligibility criteria. They must also file Form 10BA and ensure they do not own a residential property in the city of residence.
5. Do I need to submit rent receipts with my ITR?
No, rent receipts are not required to be submitted when filing your Income Tax Return (ITR). However, it is advisable to keep them for records, as the tax department may request them for verification later.
6. Can I claim a deduction if I stay in a property owned by my spouse?
No, if you live in a house owned by your spouse, you cannot claim deductions under Section 80GG. The rule prevents taxpayers from claiming rent expenses when the property is technically part of their household ownership.
7. What happens if I mistakenly claim this deduction while receiving HRA?
Claiming Section 80GG while receiving HRA is a tax violation. If detected, the tax department may:
Reject the deduction claim.
Impose penalties or additional tax demands on the wrongly claimed amount.
Conduct an audit or inquiry into the taxpayer’s filings.
8. Is there any penalty for false claims under Section 80GG?
Yes, if the Income Tax Department finds that a taxpayer falsely claimed rent deductions, they may impose:
A penalty of up to 200% of the wrongly claimed deduction.
Legal action in cases of deliberate fraud.
Interest on unpaid taxes due to wrongful claims.
9. Can I claim this deduction if I live with my parents and don’t pay formal rent?
No, simply living with your parents without paying formal rent does not qualify for Section 80GG deductions. However, if you officially pay rent to your parents and have proper rent receipts, you may claim the deduction—provided they report the rent as income in their tax returns.
10. What happens if my landlord does not provide a PAN?
If the annual rent exceeds ₹1 lakh, the landlord’s PAN is mandatory. If the landlord does not provide their PAN:
The taxpayer must submit a declaration explaining the situation.
The tax department may reject the deduction if the landlord’s details are missing.
11. Can I claim deductions for multiple rental properties?
No, you can only claim rent deductions for one residential property under Section 80GG. If you pay rent for multiple properties, only one can be considered for tax benefits.
12. Does this deduction apply to co-living spaces or PG accommodations?
Yes, taxpayers staying in PGs or co-living spaces can claim rent deductions under Section 80GG, provided they have:
A valid rental agreement or rent receipts.
No ownership of another residential property in the same city.
Filed Form 10BA as proof of rent payment.
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