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Deduction for rent paid – Section 80GG

Do you pay rent but don’t get a house rent allowance (HRA)? Don’t think you can not get any income tax benefit. You can qualify to save tax under section 80GG of the Income Tax (IT) Act if you satisfy certain conditions. Read on.



Salaried people who pay rent and get a house rent allowance (HRA) can claim exemption of that amount in most cases.

(To know more, please read “Income Tax (IT) treatment of House Rent Allowance (HRA)”)

But what if you are not salaried? What if you are a businessman paying rent? Or, what if you are salaried but do not get any HRA? Can you get any income tax benefit?

Yes, you can. You can claim deduction of the rent paid if you satisfy certain conditions.

Who can claim deduction?

Any individual can claim the deduction u/s 80GG. Irrespective of whether you are a salaried individual, or a business person, you can claim deduction under Sec 80GG.

Of course, you need to be paying rent, and for your own accommodation.

Thus, if you are paying rent for a house where your parents live, you can not claim deduction u/s 80GG. Similarly, if you are staying in a house but your spouse is paying the rent, you can not claim any deduction.

You can claim deduction for either furnished or unfurnished accommodation.


Restrictions on claiming the deduction

There are certain restrictions in this section. You can not claim deduction u/s 80GG if:

  • You receive HRA from your employer (or you received HRA from your current or previous employer at any time in the year)
  • You or your spouse or your minor child owns a house at the place (city / town / village) where you normally stay, work or conduct business
  • You are a member of a Hindu Undivided Family (HUF), and the HUF owns a house at the place where you normally stay, work or conduct business
  • You own a house at any other place and claim concessions of self-occupied house property for it (For example, tax benefit of a home loan for the house)

Amount of deduction under section 80GG

So, how much can you claim as deductible u/s 80GG?

The amount allowed as deduction is the minimum of the following:

  • Rent / lease amount paid less 10% of your total income
  • Rs. 2,000 per month
  • 25% of your total income

Here, Total Income means:

Your Gross Total Income

Less long term capital gain, and short term capital gain that would be charged at a concessional tax rate (like STCG from sale of shares)

Less all deductions other than the deduction under Section 80GG


Other Conditions

Form 10BA

You need to declare that you are paying the rent. This has to be done by filling up and filing from 10-BA.

Download From 10BA (Declaration to be filed by the assessee claiming deduction under section 80GG) here

(You need to be logged-in to download Form 10BA. Please take advantage of the free registration that takes less than a minute. To know the benefits of registration, please click here.)

City / Municipality

The deduction u/s 80GG is available only if the house is situated within specified municipal areas. However, all major cities are a part of the specified municipal areas.

Example

Let’s assume the following (amounts per annum):

Basic: Rs. 4,00,000
DA: Rs. 50,000

You pay a rent of Rs. 5,000 per month.


Here, the deduction that you can claim is the minimum of:

1. Rent / lease amount paid less 10% of your total income:

(Rs. 5,000 * 12) – 10% of (Rs. 4,00,000 + Rs. 50,000)
= Rs. 60,000 – Rs. 45,000
= Rs. 15,000

2. Rs. 2,000 per month

That is, Rs. 24,000 per year.

3. 25% of your total income

25% of (Rs. 4,00,000 + Rs. 50,000)
= Rs. 1,12,500.

Thus, you would be able to claim a deduction of Rs. 15,000.

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Comments

  1. Anonymous says:

    Hi Srikanta,

    I don’t think I understand your question right. Also, you have not provided full information.

    For more on HRA exemption, please read “Income Tax (IT) treatment of House Rent Allowance (HRA)“.

  2. Srikanta behera says:

    HRA Benifit for Govt.Employee for Orissa – Annual Income Gross-4.5 lac per annum

  3. SUDHAKAR says:

    how much is the HRA excemption FOR CONSOLIDATED EMPLOYEE

  4. Anonymous says:

    Hi Sudhakar,

    Sorry, but I am not sure what you mean by a “consolidated employee”. Can you please elaborate?

    To know more about HRA exemption, please read “Income Tax (IT) treatment of House Rent Allowance (HRA)”“.

  5. Anonymous says:

    Hi Sonu,

    Yes, you can claim the exemption at the time of filing the return. You would need to file ITR2.

    Check out “Income Tax (IT) treatment of House Rent Allowance (HRA)” for the documents needed and all other details.

  6. Senthil says:

    I was on job only for six months during FY08-09 and received HRA. But I paid rent for my own accommodation for the whole FY. Can I include the whole year rent in the calculation for HRA exemption under section 10 (13A)? If not, can I claim for deduction for rent paid during my unemployment period under Sec 80GG? Thank you.

  7. Anonymous says:

    Hi Senthil,

    You can only include the rent paid for the period during which you received the HRA.

    Yes, you can benefit from Sec 80GG for the remaining period.

  8. Anonymous says:

    Hello,

    I am living in rented accomodation from last two years and so far i have not got any exemption from my employer.

    Can i claim at the time of filling the return and what are the documents required for the same.

    Regards
    Sonu

  9. Senthil says:

    Hi Raagvamdatt,

    Thank you for the quick reply.

    I am not claiming HRA exemption for the first six months as the rent paid during this period is less than 10% of my basic.

    I need a few clarifications on Sec 80GG though.

    Section 80GG says, “In computing the total income of an assessee, not being an assessee having any income falling within clause (13A) of section 10, there shall be deducted any expenditure incurred by him in excess of ten per cent of his total income towards payment of rent…”.

    You have mentioned in this article the following pre-condition for claiming benefit u/s 80GG:

    “You can not claim deduction u/s 80GG if:
    •You receive HRA from your employer (or you received HRA from your current or previous employer at any time in the year)”

    My doubt is: does the text of Sec 80GG refers to the monthly total income or yearly total income? Can I claim benefit u/s 80GG even though I have received HRA during the FY but not claiming any benefit u/s 10(13A)?

    Thank you.

  10. Anonymous says:

    Hi Senthil,

    It refers to the yearly income.

    My interpretation of your case is that although you do get an HRA, you do not have any “income falling within clause (13A) of section 10″ as your rent paid is less than 10% of the basic.

    Thus, you should be able to claim tax benefit u/s 80GG.

  11. Anonymous says:

    Hi Raagvamd,

    I live in a rented accomodation for past three years and don’t get HRA from my company. I had filed IT return for previous years without 80GG benefit (AY2008-09, AY2009-10). Can I still claim this benefit and get refund on income tax.
    If yes, how and when do I submitt form 10BA?

    Regards,
    Kranti

  12. Hi,

    Yes, you can. You would need to file revised IT returns, and would need to claim refunds.

  13. Dhinakaran says:

    Hi,

    If we want to claim deduction under section 80GG, is it enough to produce only Form 10BA or do we need submit the rent receipt also. If yes, is there any limit up to which rent receipt is not required.

  14. SIR, MY SON IS 7 YRS OLD AND 80% DISABLE. MY GROSS SALARY IS AROUND 430000. MY SAVINGS ARE OVER ONE LAC, SO CLAIMING UNDER 80C. CAN I GET MORE EXEMPYION UNDER 80DD?

  15. R. K. Singh says:

    Dear Sir,
    I am working in an organisation where I get the HRA. I got Rs. 1500/- per month but actually I pay Rs. 2100/- per month for my rented accommodation. My annual salary is appr. Rs. 300000/-

    I have 2 questions regarding that:-

    1.Which amount is considered when the HRA is minus from the gross salary at the time of TDS?

    2. If more TDS is deduted then can I claim refund of amount under section 80 GG of Income Tax Act from IT Department?

    Thanks,

    regards
    R. K. Singh

  16. C Natarajan says:

    My break up of monthly salary is Basic 29400 HRA 11760 Others 15300. In the previous year I was on unpaid medical leave for about 4 months and did not get any salary during this period. But I had to pay my rent for the full year for the house where I stay which is Rs 9500 per month. Can I claim exemption for the full year or what amount is eligible for exemption.
    You can reply on my email also.

    Regards,

    Natarajan

  17. ranjeet says:

    can a pensioner avail benefit u/s 80gg, also if one has purchased property but the same is under construction will that tantamount to having house

  18. shahalam says:

    Is purchase of Equity Share or debenture is eligible for claim deduction under Sec 80C

  19. I am working in govt. department on contract basis where i am recieving Rs 16000 P.m (consolidate) without showing Basic,D.A, HRA ect .
    Can I claim Deduction Under sec 80GG

  20. Dear Sir,

    I have taken home loan(around Rs. 34 lakhs) in the month of March 2007 for purchasing new flat. I am suppose to get the possession of the flat in the month of Dec 2010. I want to know will I get a rebate of tax on interest of 1,50,000 or Rs. 30,000.

    Thanks,
    Tuhin

  21. Mahender Singh says:

    I want to know is it mandatory to submit LAND LOARD PAN No Rent Receipt if I m paying Rent 15000/- PM.

  22. Mahender Singh says:

    I want to know is it mandatory to submit LAND LOARD PAN No Rent Receipt if I m paying Rent 15000/- PM. and under which section or notification

  23. ANISH KUMAR says:

    Hi
    If we want to claim deduction under section 80GG, is it enough to produce only Form 10BA or do we need submit the rent receipt also. If yes, is there any limit up to which rent receipt is not required.

  24. Hi,

    i get HRA 15000 Per month and i pay 18000 per month to my father for house rent.

    can i submit my father pan card and rent recipt.

  25. My friend Anju living with her parents. She paid Rs. 4000/- to her parents as rent. Can she claim u/s 89 for tax rebate? and Can she show her parents as depended in office record?

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