Section 80GG — Rent Deduction for Individuals Not Receiving HRA

Section 80GG of the Income Tax Act provides a deduction for rent paid by individuals who do not receive any House Rent Allowance (HRA) from their employer — such as self-employed professionals, freelancers, and salaried individuals whose employer doesn't provide HRA. Here is the complete guide.

Who Can Claim Section 80GG?

• Individuals who pay rent for their residence and do NOT receive HRA as part of their salary
• Self-employed persons, freelancers, partnership firm partners, proprietors
• Salaried employees of companies that do not include HRA in the salary structure
• Not available in the new tax regime (115BAC) — only under the old regime

Conditions for Section 80GG

• The individual, spouse, minor child, or HUF (of which the individual is a member) must NOT own any residential accommodation at the place of employment/business or any other place
• Must actually pay rent and reside in rented premises
• Must file a Form 10BA (declaration to the income tax department) — stating the details of rent paid and that the conditions are met
• Form 10BA is filed online on the IT portal before or at the time of ITR filing

How Much Can Be Claimed?

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

• ₹5,000 per month (₹60,000 per year) — the maximum cap
• 25% of total income (Adjusted Gross Total Income — before this deduction)
• Actual rent paid minus 10% of total income

Example: Annual income ₹8 lakh, rent paid ₹6,000/month (₹72,000/year):

• Cap 1: ₹60,000/year
• Cap 2: 25% × ₹8,00,000 = ₹2,00,000
• Cap 3: ₹72,000 − (10% × ₹8,00,000) = ₹72,000 − ₹80,000 = Negative (no deduction)
• Result: Lowest = ₹0 (no deduction as Cap 3 is negative)

For the deduction to work, rent must exceed 10% of income. At ₹8 lakh income, rent must be above ₹80,000/year (₹6,667/month).

Conclusion

Section 80GG provides an important rent deduction for individuals without HRA — especially beneficial for self-employed professionals and freelancers. SPOTON ensures all eligible deductions including 80GG are claimed in ITR filings for clients across Kerala. Contact us for expert income tax services.