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Section 80GG - Deduction for Rent

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Hiral Vakil

Chapter VI-A
Form 10BA
HRA
Section 80GG
Last updated on July 15th, 2021

Section 80GG of Income Tax Act allows individuals a deduction for rent paid for furnished or unfurnished accommodation. The deduction is allowed to taxpayers who do not receive any HRA from their employer.

Deduction under section 80GG is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime
Tip
Deduction under section 80GG is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime

What are the Conditions to Claim a Deduction for Rent Paid Under Section 80GG of Income Tax Act?

What is the Deduction Limit Under Section 80GG?

For FY 2018-19 (AY 2019-20), Deduction under this section will be the least of the following:

What is the Exception to Section 80GG?

With respect to claiming deductions under section 80GG there are certain exceptions that one needs to take care of:

How is the Deduction Calculated Under Section 80GG?

Below mentioned are the medial authorities who are eligible to issue a disability certificate:

Mr Modi’s annual income is INR 8 lakh and he does not get HRA. He is paying a rent of INR 20,000 per month which is INR 2,40,000 annually. Let us now calculate his deductible income, whichever of the following is lower will be considered as the deductible amount:

Point 1: Total rent paid less 10% of the total income

Rent paid by Mr Modi in total is INR 2,40,000 less 10% of his annual income (INR 8,00,000) is INR 80,000 hence the deductible amount will come to INR 1,60,000 (2,40,000-80,000)

Point 2: 25% of the annual salary

Under this, the 25% of INR 8,00,000 would come to INR 2,00,000

Point 3: INR 5000 per month i.e INR 60,000 annually

Here Mr. Modi can avail INR 60,000 as a deduction amount.

As the condition to claim deduction under section 80GG is that the amount has to be the lowest from the above three, Mr Modi will be able to claim INR 60,000 as a deduction.

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

Salaried Individuals are eligible if

Non-Salaried individuals are eligible if

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. INR 5,000 per month i.e, INR 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 INR 20,000 per month as rent for a year and his total income is INR 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. INR 1,20,000 (INR 20,000*12 months – 10% of INR 12,00,000)
  2. INR 3,00,000 (25% of INR 12,00,000)
  3. 60,000 (INR 5,000*12 months)    

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

ITR Form Applicable for Section 80GG

The taxpayer can claim deductions u/s 80GG while filing ITR by full-filling the above conditions. Individuals/HUFs can claim 80GG in any of the ITR forms, i.e, ITR 1ITR 2ITR 3, and ITR 4 depending upon their income sources. The due date for filing ITR is 31st July of the next FY if the tax audit is not applicable.

For FY 2019-20, due to COVID-19 the due date has been extended to 31st of December to file the tax audit report and 31st of January 2021 to file the ITR
Tip
For FY 2019-20, due to COVID-19 the due date has been extended to 31st of December to file the tax audit report and 31st of January 2021 to file the ITR

Supporting Documents

Apart from the usual documents like Form 16 and PAN, you will need the following documents:

FAQs

Can I claim deduction u/s 80GG if I own a residential house?

You can claim deduction under section 80GG if you own a residential house property subject to following conditions:
– You or your spouse or children should not own a house property at your ordinary place of residence or office or employment; or
– You should not own a self-occupied house property anywhere in India.
So if you own a residential house property but it is given on rent then you can claim deduction under section 80GG for rent paid.

Can I claim a deduction u/s 80GG even if I’m Self employed?

Yes. You can claim a deduction for rent paid up to INR 60,000 even if you are self-employed.

Who can claim a deduction u/s 80GG?

Only an individual can claim deduction for rent paid under this section.

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.

Got Questions? Ask Away!

  1. Hey @sushil_verma

    There are a wide range of deductions that you can claim. Apart from Section 80C tax deductions, you could claim deductions up to INR 25,000 (INR 50,000 for Senior Citizens) buying Mediclaim u/s 80D. You can claim a deduction of INR 50,000 on home loan interest under Section 80EE.

  2. Hey @Dia_malhotra , there are many deductions that you can avail of. Your salary package may include different allowances like House Rent Allowance (HRA), conveyance, transport allowance, medical reimbursement, etc. Additionally, some of these allowances are exempt up to a certain limit under section 10 of the Income Tax Act.

    For eg,

    • Medical allowance is exempt up to INR 15,000 on a reimbursement basis.
    • Children education allowance is exempt up to Rs. 200 per child per month up to a maximum of two children.
    • Conveyance allowance is exempt up to a maximum of Rs. 1600 per month.

    Tax on employment and entertainment allowance will also be allowed as a deduction from the salary income. Employment tax is deducted from your salary by your employer and then it is deposited to the state government.

  3. The benefit Section 80EEB can be claimed by individuals only. An individual taxpayer can claim interest on loan of an electric vehicle of up to INR 1.5 lacs u/s 80EEB. However, if the electric vehicle is used for the purpose of business, the vehicle should be reported as an asset, loan should be reported as a liability and the interest on loan can be claimed as a business expense irrespective of the amount. (We have updated the article with the changes).

    Thus, if you have a proprietorship business, you should claim interest amount as a business expense only if the vehicle is used for business purpose. However, if it is used for personal purpose, you can claim deduction of interest u/s 80EEB in your ITR since you would be reporting both personal and business income in the ITR (under your PAN).

    As per the Income Tax Act, the deduction under Section 80EEB is applicable from 1st April 2020 i.e. FY 2020-21.

  4. Hey @Sharath_thomas , we have updated the content according to the appropriate assessment year. Thanks for the feedback. :slight_smile:

  5. Hey @shindeonkar95

    In case of capital gain income (LTCG/STCG), transfer expenses are allowed as deduction, except STT.

    However, in case of business income (F&O, intraday), all expenses incurred for the business (including STT) are eligible to claim deduction in ITR.

    Hope, it helps!

  6. Hello,

    Is it possible to claim deductions under S. 80CCF for Infra bonds bought in the secondary market and held to maturity?

    There were a number of 10 year infra bonds issued in the 2010- 2013 period, which will start maturing soon. These are all listed on the exchanges (although hardly any liquidity or transactions in them). If I were to buy some of these bonds in the open markets and hold them in my demat to maturity (<3 years), is it possible to claim tax deductions (upto 20k per year) under 80CCF for buying?

    I couldn’t find anything on this. Any help is appreciated.

  7. Hello @Veejayy,

    Yes you can claim deduction under 80CCF for investment made in specified infrastructure and other tax saving bonds bought in the secondary market and held to maturity.

    Deduction under Section 80CCF can be availed only through investment in certain tax saving bonds, issued by banks or corporations after gaining permission from the government which shall be restricted upto 10,000 per year.

    These bonds are generally long term bonds, having tenure of more than 5 years with a lock in period of 5 years in most of the cases. These bonds can be sold after the lock in period!

    Also, interest earned on these bonds will be taxable.

    Hope this helps!

  8. Hi, I need to file my income tax for FY21, I am using Quicko platform for filing, I wanted to confirm if the ELSS investment amount for the FY21 is to be added in the section 80C, since I already the amount of Rs30,072 , should I add my ELSS amount to this existing amount and submit the total

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