Section 80GG Income Tax Act

Section 80GG of the Income Tax Act allows individuals without House Rent Allowance (HRA) to claim a deduction for rent paid. This benefit is available only under the old tax regime, with a Section 80GG deduction limit of ₹60,000 per year, subject to eligibility. To claim this house rent deduction in income tax, individuals must fill out Form 10BA and meet specific conditions, such as not owning residential property in the same city. Understanding rent payments tax deductible options can help reduce taxable income. Learn how to maximize your house rent tax deduction and save more on taxes.

Keep reading to learn more about Section 80GG, the application process, and more!

Table of Contents:

• ⇾ Eligibility Criteria for Section 80GG
• ⇾ Documents Required for Claiming Tax Deductions Under Section 80GG
• ⇾ Calculation of Deductions Under Section 80GG
• ⇾ Section 80GG Deduction Limit
• ⇾ Steps for Filing Form 10BA
• ⇾ Process to Obtain Form 10BA
• ⇾ Deductions for Property Owners Under Section 80GG
• ⇾ Frequently Asked Questions

Process to Claim Deduction under Section 80GG

To claim a deduction under Section 80GG, follow these simple steps to ensure compliance with tax regulations and maximize your eligible benefits:

1. Check Eligibility
2. Calculate the Deduction Amount
3. File Form 10BA
4. Include in ITR Filing
5. Keep Documents for Verification

Following this process ensures a smooth claim of deductions under Section 80GG and helps reduce your taxable income legally.

Section 80GG Eligibility Criteria

The eligibility criteria for the Section 80GG of the Income Tax Act are as follows:

• Only salaried and self-employed individuals can apply.
• Anyone apart from business enterprises can apply for this tax discount.
• The applicant must not receive HRA (House Rent Allowance) from his/her employer.
• The applicant must submit the property owner’s PAN Card if the rent paid is more than ₹1 lakh per year.
• The applicant must submit Form 10BA with the rent payment details.
• The applicant must not have received HRA from their employer during the financial year.

Section 80GG Deduction Limit

Section 80GG of the Income Tax Act, 1961 allows individuals to claim deductions on rent paid, provided they do not receive House Rent Allowance (HRA) as part of their salary. This section is particularly beneficial for self-employed individuals or salaried employees without HRA.

Maximum Deduction Limit:

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

• ₹5,000 per month (₹60,000 annually)
• 25% of total annual income (excluding long-term capital gains, short-term capital gains under Section 111A, and income under Section 115A or 115D)
• Actual rent paid minus 10% of total income

Key Points to Remember:

• The taxpayer, spouse, or minor child should not own a residential property in the city of residence.
• Form 10BA must be filed to claim the deduction.
• The property for which rent is paid should not be owned by the taxpayer.

Quick Tip: Keep rent receipts and rental agreements as proof to support your claim during tax assessments.

80GG Deduction Calculation

The maximum deduction limit under Section 80GG is ₹60,000 per year (₹5,000 per month). The deduction is calculated as:

• Lowest of ₹5,000 per month
• 25% of your total income
• Rent paid minus 10% of your income.

Here is an example of calculating deduction under Section 80GG:

• Annual Income (excluding capital gains): ₹6,00,000
• Rent Paid per month: ₹15,000
• Rent Paid per year: ₹1,80,000

Let’s calculate the deduction as the lowest of the following:

1. ₹5,000 per month = ₹60,000 per year
2. 25% of Total Income = 25% of ₹6,00,000 = ₹1,50,000
3. Rent Paid - 10% of Income = ₹1,80,000 - ₹60,000 = ₹1,20,000

The lowest amount is ₹60,000, so the deduction under Section 80GG would be ₹60,000.

Steps for Filing Form 10BA

Save on income tax with Form 10BA while filing your income tax. Follow the steps to fill out the Form 10BA to apply for the Section 80GG of the Income Tax Act.

1. Visit the Income Tax e-Filing Portal and log in with your PAN number and password.
2. Go to 'e-File' and search for 'Income Tax Forms'.
3. Look for 'File Income Tax Forms' and search for Form 10BA.
4. Select the specific year for the deduction.
5. Fill out your personal details and rental details.
6. Confirm you don’t own a residential property in the city where you live or work.
7. Submit the form.

Documents to Claim Tax Deductions Under Section 80GG

Below are the documents required to apply for the tax deductions offered under Section 80GG.

• Form 10BA: As mentioned earlier, Form 10BA is a formal declaration that you do not own any residential property, where you live or work.
• Income Proof: Salary slips, bank statements, or tax returns to show your income.
• Rental Agreement: Ensure to keep a copy of the rental agreement as proof.
• Landlord's PAN: If the annual rent exceeds ₹1 lakh, you must provide your residence owner's Permanent Account Number (PAN).

Rent Receipts: Ensure to maintain the valid rent receipts as the evidence of the rent paid.