Claim 80GG deduction on Rent for Individuals

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Hiral Vakil

HRA
Salary Income
Section 80GG

Salaried individuals who live in rental premises usually get House Rent Allowance (HRA) from the employer. Whether you are receiving HRA or not can be determined from your payslip. Deduction under section 80GG is allowed to a salaried individual subject to certain conditions.   

Who is eligible to claim deduction u/s 80GG?

Salaried Individuals are eligible if:

Non-Salaried individuals are eligible if:

Want to know what other tax deductions you can claim?
Read our article to understand the different types of tax deductions available to you and how to avail them.
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Want to know what other tax deductions you can claim?
Read our article to understand the different types of tax deductions available to you and how to avail them.
Read More

What is the threshold limit for claiming deduction u/s 80GG?

The lowest of the following is allowed as a deduction:

  1. Total rent paid less 10% of the total income
  2. 25% of the total income
  3. Rs. 5,000 per month i.e, Rs. 60,000 annually.

Let’s understand this with an example: Sharad is a salaried individual who does not receive HRA from his employer and lives in rented premises in Bangalore. Sharad pays Rs. 20,000 per month as rent for a year and his total income is Rs. 12,00,000. Neither Sharad nor his wife owns any residential property in Bangalore or at any other place.

In the above case, Sharad will be eligible to claim deduction under section 80GG even though he is a salaried individual. The deduction will be the lowest of the following:

  1. Rs. 1,20,000 (Rs. 20,000*12 months – 10% of Rs. 12,00,000)
  2. Rs.  3,00,000 (25% of Rs. 12,00,000)
  3. Rs. 60,000 (Rs. 5,000*12 months)    

Therefore, Sharad can claim a deduction of Rs. 60,000 for rent paid by him during the year provided he files Form 10BA first.   

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FAQs

Can I claim 80GG along with my HRA?

No. Deduction under section 80GG is only available to individuals who do not get House Rent Allowance (HRA).

Can I claim 80GG in new tax regime?

No. Section 80GG is part of Chapter VI-A. The New Income Tax regime doesn’t allow any exemptions under chapter VI-A. Hence, you cannot claim section 80GG.

What is the purpose of section 80GG?

Section 80GG is basically providing relief to individuals who pay rent to stay but don’t get an HRA from their employer. Hence, those individuals can claim deduction u/s 80GG up to the limit of Rs 60,000 annually.

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