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Section 80GG: Deduction for Rent

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Hiral Vakil

Chapter VI-A
Form 10BA
HRA
Section 80GG

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
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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?

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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.

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:

Tax Savings & Deductions: Section 80C, 80CCE, 80D, 80TTA & others
Learn more about the deductions that can be claimed on certain expenses
Read More
Tax Savings & Deductions: Section 80C, 80CCE, 80D, 80TTA & others
Learn more about the deductions that can be claimed on certain expenses
Read More

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.

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.

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