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Section 80GG of Income Tax Act & Deductions in Respect of Rent Paid, Conditions & Eligibility

Updated on: Jun 7th, 2024

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2 min read

Usually, HRA forms part of your salary, and you can claim a deduction for HRA. If you do not receive HRA from your employer and make payments towards rent for any furnished or unfurnished accommodation occupied by you for your own residence, you can claim a deduction under section 80GG towards the rent that you pay.

An individual should reside in a rented property and not own property in the same city to claim a deduction under Section 80GG. If the employer provides a Home Rent Allowance (HRA) as part of the monthly salary, an individual will not be eligible to claim a deduction under this section.

Section 80GG deduction is applicable to salaried and self-employed professionals. Thus, if an individual is a business owner, he/she will be eligible to claim tax deductions under this section. Individuals residing on their parents' property, which they own, are also eligible to claim Section 80GG benefits. However, such individuals should sign a rental agreement with their parents and give rent to them. The rental amount paid to their parents will be taxable when they file their ITR.

Note: Both the HRA exemption and section 80GG deduction would be available under the old tax regime, not under the new tax regime.

Eligibility for claiming deduction under Section 80GG

A taxpayer must fulfil the following conditions to claim a deduction under Section 80GG:

  • You should have opted to pay tax under the old tax Regime (i.e., he should opt to move out of the applicability of Section 115 BAC(1A))
  • You have not received HRA from an employer at any time during the year for which you are claiming 80GG. The HRA component should not form part of your salary to claim 80GG.
  • In case you own any residential property at any place for which your income from house property is calculated under applicable sections (as a self-occupied property), no deduction under section 80GG is allowed.In case you own any residential property at any place for which your income from house property is calculated under applicable sections (as a self-occupied property), no deduction under section 80GG is allowed.
  • You will be required to file Form 10BA with details of the payment of rent.
  • If your rent amount exceeds Rs.1 lakh per annum, you will have to submit the PAN card of your property owner to claim the deduction.
  • You should not have claimed the HRA at any time during the financial year. If you have changed jobs and received an HRA deduction from your previous employment in the financial year, you will be ineligible to claim a deduction under this section. 

Eligible Amount of Deduction Under 80GG – 80GG Deduction Limit

The lowest of these will be considered as the deduction under this section- 

  • Rs.5,000 per month or 60,000 per year
  • 25% of the total income (excluding long-term capital gains, short-term capital gains under Section 111A and Income under Section 115A or 115D and deductions under 80C to 80U. Also, income is before making a deduction under section 80GG).
  • Actual rent less 10% of income 

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How to Fill Form 10BA?

Form 10BA is a declaration that has to be filed by an individual who wants to claim a deduction under section 80GG for rent paid on rental property. It is a declaration that you are not claiming the benefit of a self-occupied property on the house in any other location or the same location as you are employed. Following are the details to be filled in 10BA:

  • Name and PAN of assessee 
  • Full address of assessee
  • Tenure and rent amount 
  • Rent payment mode
  • Name and address of the landlord
  • PAN of the landlord if rental is above INR 1 lakh
  • A declaration that no other house property is owned by the assessee himself or in the name of spouse/minor child or by the HUF of which he is a member.
Form No.10BA

How to get Form 10BA?

An individual can get Form 10BA from the HR department of the organisation or tax offices. They can also download the form online from the Income Tax website.

How to claim a deduction under Section 80GG?

Eligible individuals can claim the deduction while filing ITR (under the old tax regime) when they satisfy the following conditions: 

  • They must be paying rent for the property where they are currently residing.
  • They should not own property in the same city or location as their workplace. If they own a property within the city but live in a rented property, Section 80GG will not be applicable to them. 
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Frequently Asked Questions

If I am claiming HRA, then can I claim a deduction under section 80GG also?

No, if you are claiming HRA, then you cannot claim a deduction under section 80GG. The benefit can be availed of one only, i.e., HRA or Section 80GG.

In other words, HRA exemption can be claimed by those who receive HRA as part of their salary income whereas deduction under Section 80GG can be claimed by those who do not receive HRA but pay rent for the accommodation. Suppose, in a particular financial year, you have changed employment and have received HRA from one of the employers, then you will be ineligible to claim deduction under this section.

Can salaried individuals claim this deduction?

Only salaried individuals who do not receive HRA, can claim deduction under this section.

What is Form 10BA?

It is a declaration that has to be filed by an individual who wants to claim a deduction under section 80GG for rent paid on rental property while filing their income tax returns.

Can I claim 80GG when I am living with my parents and paying rent to them?

Yes, you can pay the monthly rent to your parents. However, you need to enter into a rental agreement with them, and they must include the rental payment as part of their income.(This can be availed only when the old tax regime is opted)

I own a home in Bangalore but I live in a leased residence in Delhi. Can I claim a deduction under Section 80GG?

Yes, you can claim a deduction under Section 80GG (under old tax regime) for the rent you are paying since you do not have your own house in Delhi.

Can I claim Section 80GG benefits when the property is in my father’s name?

Yes, you can claim Section 80GG benefit (under old tax regime) when the property is in your father’s name and you are paying rent to him. You must enter into a rental agreement with your father and submit Form 10BA to claim the benefit. 

Under section 80GG, what is the total adjusted income?

Capital gains, both long-term and short-term, are not included in adjusted total income. Short-term capital gains are the only gains exempt from the 10% tax under Section 111A.

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