Section 80GG helps us to claim House rent amount as deduction if you are a salaried employee or business owner and do not receive HRA component in your salary slip. Maximum of Rs. 60,000 can be claimed as deduction in a financial year under Section 80GG of income tax act if you stay in rented accommodation (furnished or unfurnished) and paying house rent, without receiving HRA component in your salary.
Let us understand Section 80GG if more detail
- What is Section 80GG?
- Section 80GG Eligibility
- Tax Deduction Limits under Section 80GG
- Who Cannot claim 80GG?
- Frequently Asked Questions
What is Section 80GG?
- Section 80GG of Income Tax Act allows us to claim house rent amount paid in a financial year to save income tax
- If you receive HRA (House Rent Allowance) in your Salary payslip, than you should claim HRA instead of using Section 80GG
- But if you don’t receive HRA component in your salary payslip, you can use Section 80GG, if you stay in rented accommodation
- Condition to claim Tax Deduction in this section is: you must not own any property in same city. Also you cannot claim both – HRA received from employer and Section 80GG deduction
- This section is applicable to both salaried employees and self employed as well. So if you are a business owner, you can still claim deduction under Section 80GG if staying on rent, provided you are no carrying out any business in rented accommodation
- You can also stay with your parents, who are having property in their name, pay monthly rent to them and have a rental agreement as well to claim Section 80GG deduction. The income received by your parents will be taxable in their hands
- Maximum limit of Section 80GG is Rs. 60,000 in a financial year. If the rent amount goes above Rs. 1 Lakh in financial year, than you need to provide PAN number of landlord
ALSO READ: How to Claim HRA when living with Parents?
Section 80GG Eligibility
There are certain conditions to claim Section 80GG deduction:
- Both salaried employee and self employed professionals can claim house rent paid under Section 80GG
- Salaried employee must not receive HRA component in payslip to claim this deduction
- Also, the individual must not own any property in the same city where he / she is staying on rent to claim this deduction
- Neither your spouse or minor child should own any residential property in same city
- You cannot claim this deduction if you own any other property for which Income from house property is calculated as self occupied property
- You are required to fill Form 10BA with details of payment of rent paid to claim this deduction
- If you have changed jobs and received HRA in a financial year from previous employer, you cannot claim this deduction under Section 80GG
- You can claim Section 80GG deduction only with old tax regime. New Tax Regime does not allow this deduction.
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Tax Deduction Limits under Section 80GG
Lowest of below numbers will be considered as the deduction under Section 80GG:
- Rs. 5000 per month or Rs. 60,000 per year
- 25% of the total income (excluding long-term capital gains, short-term capital gains under Section 111A and Income under Section 115A or 115D and deductions under 80C to 80U. Also, income is before making a deduction under section 80GG)
- Actual rent minus 10% of income
All above numbers need to be calculated, and lowest number will be considered as deduction under Section 80GG
Who Cannot claim 80GG?
You cannot claim 80GG deduction in case of any following conditions:
- If you receive HRA component in salary payslip, you cannot claim this deduction
- If you own a residential property in same city where you stay in rented accommodation, than you are not eligible to claim this deduction
- In case you own a residential property in some other city, and income from house property is considered as self occupied property, than you cannot claim this deduction
Watch how to calculate HRA Video:
So Section 80GG of income tax act helps us to claim house rent amount paid in a financial year in case you don’t receive HRA component in your salary payslip. Both salaried and self employed professionals can claim this deduction with maximum limit of Rs. 60,000 in a financial year.
It is important to note that you cannot claim this deduction if you, your spouse or minor child owns a self occupied property. Also, if you don’t own any property and stay with your parents in their property, you can pay them rent and claim deduction under Section 80GG. In this case, the rent paid by you will be considered as their income while your parents file Income Tax Return (ITR).
Some more Reading:
- Income Tax Calculator Excel Download
- Old vs New Tax Regime Which is Better?
- Section 80TTA to claim Savings Account Interest
Frequently Asked Questions
Who is eligible for 80GG?
Anyone who is not receiving HRA (House Rent Allowance) component in salary payslip is eligible to claim 80GG tax deduction up to maximum of Rs. 60,000 in financial year. It is applicable to both salaried and self employed professionals.
What is 80GG limit deduction?
The limit under 80GG is Rs. 60,000 per year or Rs. 5000 per month for the house rent paid. If the rent paid is above Rs. 1 Lakh in FY than PAN of landlord need to be provided while filing ITR.
Can I claim 80GG without proof?
No, you need to have rent receipts or online transactions as proof in case you are asked to show the proof of house rent paid by you.
Can I claim 80GG while staying with parents?
Yes while you are staying in your parent’s property and do not own any property in your name, you can pay house rent to your parents and claim 80GG tax deduction to save income tax.
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