Section 80GG of Income Tax Act

Section 80GG is a special section for people who do not receive HRA in the form of salary but still pay rent. Section 80GG enables them to claim a deduction for rent paid, provided they fulfil certain conditions prescribed under the Income Tax Act.

In comparison to salaried people getting HRA, these people need a special provision, and Section 80GG of the Income Tax Act bridges that gap. The deduction is intended to create equality among salaried employees with HRA and others without it, giving fair treatment in terms of taxation to everybody.

To claim a deduction under this section, taxpayers must satisfy certain eligibility rules:

• The taxpayer must be an individual or a Hindu Undivided Family (HUF).
• The taxpayer should not receive House Rent Allowance (HRA).
• Rent must be paid for residential accommodation only.
• The taxpayer should not own any house property in the city of residence.
• The taxpayer must file Form 10BA while claiming this deduction.

These eligibility rules ensure that only genuine cases are covered under the Section 80GG Income Tax deduction framework.

This deduction is designed for individuals who pay rent but do not receive an HRA. For example, self-employed professionals, freelancers, and salaried employees without HRA in their salary structure can claim it. Additionally, members of Hindu Undivided Families (HUFs) can also benefit if they meet the set conditions.

The deduction is especially beneficial for small business owners and professionals working in urban areas, where renting is often the only viable option. Hence, Section 80GG of the Income Tax Act extends its benefits to a wide range of taxpayers, promoting fairness in tax liability among various categories of earners.

The deduction amount under Section 80GG is calculated using specific rules. The taxpayer can claim the lowest of the following three amounts:

• 25% of total income (excluding capital gains).

or
• Actual rent paid minus 10% of total income

or
• Fixed ceiling of ₹5,000 per month (₹60,000 annually).

Now you should compare all three amounts, and the lowest figure among them becomes the allowable deduction under Section 80GG. This ensures taxpayers receive a fair yet limited deduction without misuse.

To understand how much deduction you can actually claim, it is important to know the maximum limits allowed under Section 80GG. The table below explains the deduction ceiling for FY 2025–26:

Thus, the maximum deduction is capped at ₹60,000 per year for FY 2025–26.

While Section 80GG is helpful, it comes with restrictions to prevent double benefits. Firstly, taxpayers claiming House Rent Allowance (HRA) cannot claim a deduction here. Secondly, owning a residential property in the city of residence automatically disqualifies the claim.

Further, one cannot claim a deduction if rent is paid to a spouse or a minor child. Additionally, joint ownership in property with family members restricts eligibility.

These exceptions maintain fairness in the application of the law and ensure deductions are not misused by taxpayers owning real estate assets.

Form 10BA is a self-declaration form required for claiming deductions. Let’s quickly understand the form filling procedure in the step-by-step manner.

For swift claim deduction and to avoid any last moment disappointing experience, it’s important to keep certain documents handy. Let’s quickly check the list-

• Rent agreement between tenant and landlord.
• Rent receipts signed by the landlord.
• PAN card of landlord (if rent exceeds ₹1 lakh annually).
• Proof of rent payment (bank statement or transfer receipt).
• Duly filled and signed Form 10BA.
• Self-declaration confirming non-ownership of residential property.
• Proof of identity and PAN of the taxpayer.

Property owners cannot generally claim a deduction under Section 80GG if they reside in their own house. However, if they own property in a different city and live in rented accommodation for work purposes, they may still claim the deduction, provided they do not receive HRA.

The law restricts double benefits, ensuring fair taxation. Therefore, a property owner renting a house in the same city cannot claim this deduction. This provision balances relief to genuine taxpayers while preventing unfair tax avoidance strategies by homeowners.

No, you cannot claim both HRA and Section 80GG deduction at the same time. Section 80GG is specifically meant for individuals who do not receive HRA from their employer but still pay rent.

If the allowance is already part of your salary structure, then you are only eligible to claim HRA exemption under the income tax provision. Section 80GG applies only when HRA is not provided, ensuring there is no duplication of benefits for the same rental expense.