Section 80GG of the Income Tax Act of 1961 enables a taxpayer to deduct rent paid for housing even if they do not get House Rent Allowance (HRA) from their employer. It is especially important for self-employed people and salaried employees whose pay packages do not include HRA. The deduction is limited to the least of three stated requirements, with a maximum ceiling.

Sharda Associates, with 45,500+ project reports provided across India, lets salaried professionals, freelancers, and self-employed persons claim deductions like Section 80GG appropriately. They also offer CA-certified project reports starting at ₹2,999 for financing and compliance purposes. Our team ensures that your tax return is correct, compliant, and filed on time.

Understanding Section 80GG in Simple Terms

Many taxpayers pay rent but do not receive HRA as part of their compensation; this is typical among self-employed professionals, consultants, and some salaried employees. Section 80GG was created particularly to help these taxpayers by allowing them to claim a deduction for rent paid under certain situations.

This deduction is only allowed under the former tax scheme, and the taxpayer must complete Form 10BA to certify eligibility.

Eligibility Criteria for Section 80GG Deduction

To claim a deduction under Section 80GG, the following conditions must be satisfied:

• The taxpayer must be self-employed or salaried without include HRA as part of the salary.
• The taxpayer, their spouse, or minor child should not own any residential property in the area where they live or work.
• If the taxpayer owns property elsewhere, they should not claim self-occupied property advantages for it.
• To file Form 10BA and certify eligibility, the taxpayer must be paying rent for their current living situation.

How is Section 80GG Deduction Calculated?

The deduction allowed under Section 80GG is the least of the following three amounts:

Condition	Description
Condition 1	₹5,000 per month (₹60,000 per year)
Condition 2	25% of the taxpayer’s total income (before this deduction)
Condition 3	Actual rent paid minus 10% of total income

Whichever of these three amounts is the lowest becomes the eligible deduction under Section 80GG.

Example Calculation:

Particulars	Amount (₹)
Annual Income	6,00,000
Actual Rent Paid (Annual)	1,44,000
Condition 1: ₹5,000 x 12 months	60,000
Condition 2: 25% of income	1,50,000
Condition 3: Rent paid – 10% of income (1,44,000 – 60,000)	84,000
Eligible Deduction (Least of the three)	60,000

In this example, the taxpayer can claim a deduction of ₹60,000 under Section 80GG.

Documents Required to Claim Section 80GG

• Fill out and sign Form 10BA. Provide rental receipts or agreement.
• If the annual rent exceeds ₹1,00,000, landlords must provide their PAN.
• To precisely calculate the deduction, provide confirmation that no residential property is owned at the residence/work location, as well as income proof.

Section 80GG vs HRA: Key Difference

Basis	Section 80GG	HRA (House Rent Allowance)
Applicability	Taxpayers not receiving HRA	Salaried employees receiving HRA
Governing Section	Section 80GG	Section 10(13A)
Maximum Deduction	Least of 3 conditions (capped at ₹60,000/year)	Least of 3 HRA conditions, no fixed cap
Form Required	Form 10BA	Not required, calculated by employer
Applicable Regime	Old tax regime only	Old tax regime only

Common Mistakes to Avoid While Claiming Section 80GG

1. Claim Section 80GG. While Receiving HRA

Section 80GG cannot be claimed if you already receive House Rent Allowance (HRA) from your employer. Make sure you meet the eligibility requirements before claiming the deduction.

2. Not filing Form 10BA

Many people forget to complete Form 10BA, which is required to claim a deduction under Section 80GG. Filling out the form accurately is required for a valid claim.

3. Claim the Deduction Despite Owning a House.

The deduction is not available if you possess a home property near your place of employment or business and meet the restrictions that prevent you from claiming Section 80GG.

4. Maintaining incorrect rental records

Using false rent figures or failing to retain rent receipts, rental agreements, and payment proofs might result in the deduction being disallowed during tax assessment.

5. Not providing the landlord’s PAN

If your annual rent exceeds ₹1,00,000, you must furnish your landlord’s PAN as per the Income Tax Act. Missing this information may cause problems when claiming the deduction.

6. Claiming the Deduction Under the new tax regime

Section 80GG is only available under the old tax system. Taxpayers who choose the new tax regime cannot claim this deduction, so selecting the correct tax regime is critical before completing the Income Tax Return.

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Conclusion

Section 80GG gives significant tax relief to individuals who pay rent but do not receive HRA, making it an important deduction for self-employed professionals and certain salaried employees. Understanding the qualifying criteria, proper calculation method, and required documentation guarantees that you claim the maximum benefit without error.

Sharda Associates offers 45,500+ project reports and CA-certified reports for ₹2,999, simplifying tax deduction claims, Form 10BA filing, and financial documentation.

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Frequently Asked Questions

1. What is Section 80GG of the Income-tax Act? 

Section 80GG enables taxpayers who do not get HRA to claim a deduction for rent paid on their housing, subject to certain circumstances.

2. Who can claim the deduction under Section 80GG? 

Any individual taxpayer, whether salaried or self-employed, who pays rent but does not receive HRA and does not own residential property at their place of employment, is eligible to claim this deduction.

3. What is the maximum allowable deduction under Section 80GG? 

The deduction is limited to ₹60,000 per year (₹5,000 per month) and requires one of three conditions to be met.

4. Is Form 10BA required for claiming Section 80GG? 

Yes, Form 10BA is required to disclose rent details and confirm eligibility prior to claiming the deduction.

5. Can I claim Section 80GG under the new tax regime? 

No, the Section 80GG deduction is only accessible under the old tax system.

6. Can Sharda Associates assist me properly claim Section 80GG? 

Yes, Sharda Associates offers comprehensive support with Form 10BA filing, deduction calculation, and CA-certified documents for correct tax filing.