Section 80GG Deduction: Claim Rent Even If You Don’t Get HRA
- Rajesh Kumar Kar
- Sep 10
- 10 min read
Section 80GG of the Income Tax Act provides a tax deduction to individuals who are paying rent for accommodation but do not receive House Rent Allowance (HRA) as part of their salary. This section is primarily meant for self-employed individuals, freelancers, or those whose employer does not offer HRA. It allows taxpayers to claim a deduction for rent paid for their own residence, thus reducing their taxable income. This is an important provision for those living in rented accommodations and helps them save on taxes, providing financial relief.
Table of Contents
What is Section 80GG of the Income Tax Act?
Section 80GG of the Income Tax Act allows individuals to claim a tax deduction on the rent paid for accommodation. The deduction is available to taxpayers who do not receive HRA and are not owning any residential property. The deduction helps reduce the overall taxable income, leading to lower tax liability. The amount that can be claimed as a deduction is subject to certain conditions and limits. This provision encourages individuals living in rented accommodation to benefit from tax savings, which can be quite significant for those in metropolitan areas where rent can be high.
Who Can Claim Deduction Under Section 80GG?
Section 80GG is available to individuals who are paying rent for residential accommodation but do not receive HRA. It can be claimed by the following:
Self-employed individuals: Freelancers, consultants, business owners, and others who do not receive HRA from an employer.
Salaried individuals: If the individual does not receive HRA, they are still eligible to claim this deduction.
HUFs (Hindu Undivided Families) and AOPs/BOIs (Association of Persons/Body of Individuals) that meet the conditions for claiming rent deduction.
The key requirement is that the taxpayer must be paying rent for their accommodation. Additionally, the rented property must be used for personal purposes.
How is the Section 80GG Deduction Calculated?
The Section 80GG deduction is calculated based on the following formula:
50% of the total salary (for taxpayers living in metro cities) or 25% of the total salary (for taxpayers living in non-metro cities)
Rent paid minus 10% of total income
A maximum of ₹5,000 per month.
The final amount of the deduction will be the least of these three values. However, it is important to note that the deduction can only be claimed for the rent paid for the accommodation used by the taxpayer.
For example, if you are paying ₹10,000 per month in rent, your total annual rent paid would be ₹120,000. The calculation will be based on the least of the three values mentioned above, and the maximum limit is ₹60,000 per year.
Important Conditions and Exceptions Under Section 80GG
To claim the deduction under Section 80GG, certain conditions must be met:
The taxpayer must not own any residential property in the city where they are paying rent.
The rented property must be used for residential purposes only.
The taxpayer must submit a self-declaration in Form 10BA, confirming that they are paying rent and fulfilling the necessary conditions.
The rent paid should be reasonable, and the landlord should ideally provide a rent receipt.
If the taxpayer owns a house property in another city, they cannot claim this deduction for rent paid in the city where they have their own property.
The deduction is not available for individuals claiming deductions under other sections, like Section 10 (HRA exemption), orSection 24 (interest on home loans for self-occupied property).
Required Documentation for Claiming the Deduction
To claim the deduction under Section 80GG, the following documents are required:
Rent Agreement: A copy of the agreement with the landlord to confirm the rent amount and the duration of the lease.
Rent Receipts: Proof of rent payments made, including receipts from the landlord or any other documents showing that the rent has been paid.
Form 10BA: A self-declaration form confirming the rent paid and that the individual is fulfilling all conditions required for the deduction under Section 80GG.
It is also advisable to keep records of any bank statements or digital payments made to the landlord as additional proof of payment.
How to File for Section 80GG Deduction
Section 80GG of the Income Tax Act allows individuals to claim a deduction for the rent paid for residential accommodation if they do not receive a House Rent Allowance (HRA) from their employer. This deduction is available for both salaried and self-employed taxpayers. However, there are specific conditions to be met in order to claim this deduction. Below is a detailed guide on how to claim the Section 80GG deduction while filing your Income Tax Return (ITR).
1. Fill in the Necessary Details in the ITR Form
To claim the Section 80GG deduction, you must first fill in the required details in your ITR form, which is typically either ITR-1 or ITR-2, depending on your income type and eligibility. The details for Section 80GG are usually found in the section dedicated to deductions.
In the ITR form, you need to provide the following details:
Rent Paid: Mention the monthly rent paid for the residential accommodation during the financial year.
Address of the Property: Provide the address of the property where you live and are paying rent.
PAN of the Landlord: If the rent exceeds ₹1,00,000 in a year, you will also need to provide the Permanent Account Number (PAN) of the landlord. This is a requirement by the tax authorities for transparency and compliance.
The deduction will be calculated based on the rent paid, subject to the conditions and limits specified under Section 80GG. The maximum allowable deduction under Section 80GG is ₹5,000 per month or ₹60,000 annually, whichever is lower.
2. Submit Form 10BA
Form 10BA is a declaration form that confirms your eligibility to claim the Section 80GG deduction. The form must be submitted along with your ITR to certify that:
You are paying rent for residential accommodation.
You or your spouse, minor child, or Hindu Undivided Family (HUF) does not own a house in the place of residence for which the deduction is being claimed.
The rent is being paid from your income.
It is important to note that Form 10BA is a self-declaration, meaning that you will need to provide accurate information regarding your rent payments and other relevant details. Taxpayers should fill out Form 10BA and attach it with their ITR when submitting it online.
3. Provide Proof of Rent
Along with filling in the necessary details in the ITR form and submitting Form 10BA, you must also attach proof of rent paid. The following documents serve as proof:
Rent Receipts: Rent receipts should be signed by your landlord, indicating the amount of rent paid, the period for which it is paid, and the property details. It’s important that these receipts are genuine and maintained regularly.
Rent Agreement: A copy of the rent agreement should be attached to substantiate the claim. The rent agreement should mention the rent amount, the tenure of the agreement, and both parties’ details (tenant and landlord).
Bank Statements: If rent is paid via bank transfer, attaching bank statements showing the rent payments is an additional proof of the transaction.
Cash Payments: If rent is paid in cash, ensure that you have proper rent receipts and written confirmations from the landlord, along with your statement of payments.
These documents are essential to verify the authenticity of your claim and avoid issues during tax assessment. In the case of a higher rent payment (over ₹1,00,000 annually), you will also need to provide the PAN of the landlord.
4. Ensure Compliance with Eligibility Conditions
Before claiming the Section 80GG deduction, it is important to verify that you meet the following eligibility conditions:
No House Property Ownership: You or your spouse, minor child, or Hindu Undivided Family (HUF) should not own a house in the city where you claim the rent deduction.
Rent Payment: The rent must be paid for the accommodation in which you are residing, and it must not be owned by you or close family members.
Income Restrictions: Your total income must fall within the applicable tax slab, and the deduction will be calculated as per the rent paid and the limits mentioned above.
5. Calculate and Apply the Deduction
The deduction under Section 80GG will be calculated based on the following formula:
Rent Paid – 10% of Total Income (or) ₹5,000 per month (₹60,000 annually), whichever is lower.
The tax benefit will be reduced from your total taxable income, which in turn lowers your overall tax liability. This means that you will pay less tax after the deduction is applied.
6. Verify and Submit the ITR
Once all the necessary details and documentation have been filled out, the Section 80GG deduction will be applied, and the tax liability will be reduced accordingly. After reviewing all the provided information and ensuring that there are no discrepancies, submit the ITR.
In case the ITR is filed online, an e-verification process will be required to confirm the filing. This can be done via Aadhaar OTP, EVC, or by sending a signed physical ITR-V form to the Income Tax Department. Ensure that the ITR is e-verified within 120 days of filing to avoid delays or issues with the tax assessment.
TaxBuddy’s Role in Simplifying Your Tax Filing Experience
TaxBuddy simplifies the process of claiming deductions under Section 80GG by guiding you through every step of the filing process. With its user-friendly platform, TaxBuddy helps you calculate eligible deductions, provide accurate information in your ITR, and ensures compliance with tax regulations.TaxBuddyalso assists with generating the required forms like Form 10BA and helps verify that all documents are in place before filing. For individuals who pay rent but do not receive HRA, TaxBuddy ensures they make the most out of this deduction, minimizing tax liabilities and streamlining the entire process.
Conclusion
Section 80GG provides valuable tax relief for individuals who are paying rent but do not receive House Rent Allowance (HRA). By offering a tax deduction on rent paid, this section ensures that self-employed individuals and salaried professionals can benefit from tax savings, making it easier to manage finances and reduce taxable income. However, it's essential to ensure compliance with the conditions outlined by the Income Tax Act, such as not owning property in the city where the rent is paid. With the right documentation and guidance, claiming the Section 80GG deduction can be straightforward. Platforms like TaxBuddy simplify this process, ensuring that you can file your return with ease and accuracy, maximizing your tax savings. For a hassle-free and efficient experience, it is highly recommended to download theTaxBuddy mobile app for a simplified, secure, and seamless tax filing experience.
FAQs
Q1: Can both salaried and self-employed individuals claim the Section 80GG deduction? Yes, both salaried and self-employed individuals can claim the Section 80GG deduction, provided they meet the eligibility criteria. The primary requirement is that the individual must be paying rent for their accommodation and must not be receiving any House Rent Allowance (HRA) as part of their salary. Additionally, the individual must be residing in a rented house and must not own any property in the city where they are claiming the deduction.
Q2: Is there a maximum limit on the Section 80GG deduction? Yes, the maximum deduction under Section 80GG is ₹60,000 per year, which is ₹5,000 per month. The deduction is calculated based on the least of the following:
25% of the individual’s total income (for non-metro cities) or 50% (for metro cities),
Rent paid in excess of 10% of the total income,
₹60,000 per year (₹5,000 per month).
This ensures that individuals can only claim a reasonable amount based on their actual rent payments.
Q3: What documents are required to claim the Section 80GG deduction? To claim the Section 80GG deduction, the following documents are required:
A rent agreement to confirm the rental arrangement,
Rent receipts to prove the payment of rent each month,
Form 10BA, a self-declaration form that confirms that the individual is not receiving HRA and fulfills all conditions for the deduction.
All these documents need to be submitted along with the income tax return to ensure the deduction is processed correctly.
Q4: Can I claim Section 80GG if I own a house in a different city? No, you cannot claim the Section 80GG deduction if you own a house in the same city where you are paying rent. Section 80GG only applies if you are paying rent for accommodation in a city where you do not own a property. If you own a house in another city, but rent in a different city, you can still claim the deduction as long as you meet the other criteria.
Q5: How can TaxBuddy assist in claiming the Section 80GG deduction? TaxBuddy simplifies the process of claiming the Section 80GG deduction by providing step-by-step guidance. The platform ensures that all the necessary documents, such as rent receipts and Form 10BA, are submitted correctly, and helps you accurately calculate the deduction. It also verifies compliance with all tax regulations, ensuring that the process is seamless and hassle-free.
Q6: Do I need to submit rent receipts with my tax return? Yes, rent receipts are a key requirement when claiming the Section 80GG deduction. These receipts serve as proof that you are actually paying rent for your accommodation. Additionally, you will need to submit Form 10BA, which is a self-declaration stating that you are not receiving any HRA and meet all the conditions for claiming the deduction.
Q7: Can I claim Section 80GG if I live in a family-owned property? No, Section 80GG is available only when you pay rent for a property that you do not own. If you live in a family-owned property and do not pay rent, you are not eligible to claim the Section 80GG deduction. The deduction is specifically for individuals who incur rental expenses for properties they are renting from others.
Q8: How is the deduction amount under Section 80GG calculated? The deduction under Section 80GG is calculated based on the least of the following:
50% of the total salary (for metro cities),
25% of the total salary (for non-metro cities),
Rent paid minus 10% of total income,
₹60,000 annually (₹5,000 per month).
The calculation ensures that the deduction is capped at a reasonable level based on your income and actual rent paid.
Q9: Is Section 80GG applicable to businesses? No, Section 80GG is available only for individuals. It cannot be claimed by businesses. However, businesses can claim other tax deductions related to office rent or expenses under different sections of the Income Tax Act, such as Section 37 for business expenses.
Q10: Can I revise my Section 80GG claim if I made a mistake in the original filing? Yes, if you made a mistake in your original filing, you can revise your tax return. A revised return can be filed to correct errors, such as an incorrect claim of Section 80GG or missing documentation. Ensure that all required documents, such as rent receipts and Form 10BA, are accurately submitted in the revised return to support your claim.
Q11: Can I claim Section 80GG if I am living in a rented accommodation provided by my employer? No, you cannot claim the Section 80GG deduction if your employer is providing you with rented accommodation or HRA. Section 80GG is only applicable if you are paying rent for accommodation that is not provided by your employer and if you are not receiving HRA.
Q12: Are there any special considerations for claiming Section 80GG for senior citizens? Section 80GG does not have any special provisions or increased limits for senior citizens. The maximum deduction remains the same for all individuals, including senior citizens, at ₹60,000 per year. However, senior citizens may be eligible for other deductions, such as those under Section 80D for health insurance premiums.
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