Deduction Against Rent Paid under Section 80GG of Income Tax Act,1961

Section 80GG of Income Tax Act

Section 80GG of the Income Tax Act under Chapter VIA provides a tax deduction to self-employed individuals and salaried employees for the rent paid. Here, the motive is to provide a tax benefit to individuals who do not receive a house rent allowance yet pay rent. Moreover, u/s 80GG deduction for rent is allowed to the taxpayer who is not receiving HRA.

There are a few conditions and limitations that self-employed individuals or salaried employees must comply with. In this article, we have covered such conditions and limitations related to tax deduction 

Tax Deduction under section 80GG of Income Tax Act

While calculating the total taxable income the taxpayer can claim a deduction against the rent paid by him. The rent must be paid for his/ her own residence. The accommodation can be for furnished or unfurnished house property. Additionally, the following conditions must also be fulfilled:

• The individual taxpayer has not received house rent allowance from his employer during the financial year
• He/ she files a declaration in Form 10BA
• Any residential property should not be owned by:

1. the assessee in his own name, by his spouse or minor child at the place where he ordinarily resides or performs duties of his office or employment or carries on his business or profession
2. the HUF at the place where he ordinarily resides or performs duties of his office or employment or carries on his business or profession. This is the case when the assessee is a member of a Hindu undivided family
3. assesses in his or her own occupation, at any other place, whose value is to be determined as per Sec 23(2)(a) or Sec 23(4)(a).

Illustration on deduction for rent

Mr. Arun claims a deduction in respect of self-occupied property in his income tax return. And also pays rent for a place in which he ordinarily resides but not owned by him. Then he cannot claim deduction under section 80GG

Quantum of deduction under section 80GG of Income Tax

U/s 80GG deduction for rent will be the least of the following:

1. Rs 5000 per month
2. 25% of the total adjusted income
3. Actual rent paid in excess of 10% of total adjusted income

Illustration on the calculation of deduction available

Particulars	Amount (Rs)
Total Rent Paid per Month	3000
Total Adjusted Income per Month	15000
The deduction will be least of the following
Rs 5000 per month	5000
25% of the total adjusted income	3750(15000*25%)
Actual rent paid in excess of 10% of total adjusted income	1500(3000 – {15000*10%})
Total Tax Deduction Allowed	1500

How to calculate the adjusted total income u/s 80GG?

The adjusted total income means the total income minus the adjustments:

The following should be deducted from the total income:

1. long term capital gain
2. short-term capital gains which are taxed at 10% that is u/s 111A
3. deductions from 80C to 80U
4. income u/s 115A to 115D

Particulars	Amount
Gross Total Income	xxx
Minus:	xxx
Long Term Capital Gain	xxx
short-term capital gains which are taxed at 10% that is u/s 111A	xxx
income u/s 115A to 115D	xxx
deductions from Section 80C to Section 80U	xxx
adjusted total income u/s 80GG	xxx

Details required to submit while claiming deduction under section 80GG

The individual taxpayer must submit the following details to claim deduction under section 80GG:

• Name of the taxpayer
• PAN of the taxpayer
• The full address of the premises along with the Postal Code against which deduction is being claimed
• Tenure (in months) of stay
• Payment Mode 
• Amount Paid to the landlord of the house property
• Name and address of the landlord
• It is mandatory to quote the PAN of the landlord if rent paid exceeds Rs 1 lakh in the financial year
• A Declaration confirming that no other house property is owned by the taxpayer himself or in the name of Spouse / minor child or by the HUF of which he is a member.

What is Form 10BA?

Form 10BA is a declaration or a statement provided by an individual to claim the deduction against rent paid. In this declaration the individual fills the below details:

1. Taxpayer’s Name and PAN
2. The full address of the premises where he resides as a tenant
3. Rent Amount
4. Name and address of the landlord

It is advisable that any taxpayer must file Form 10BA before filing his income tax return to claim a deduction.

How to file Form 10BA?

The taxpayer will have to submit the form online by logging into his/ her income tax account. You can follow the following steps to file your Form 10BA:

1. Visit the Income Tax e-filing portal
2. Login to your account by entering your username, password, and captcha code
3. In case you are a new user then you must first register yourself on the Income Tax e-filing portal
4. Once logged in you will find an option of ‘e-file’. Click on the dropdown menu and select ‘Income Tax Forms’
5. Under the ‘Income Tax Forms’ option you will find an option of ‘Form Name’. Click on it and select ‘Form No 10BA Declaration u/s 80GG (House Rent)’ from the dropdown menu.
6. Under ‘Assessment Year’ enter the applicable assessment year
7. Under the ‘Submission Mode’ select the ‘Online’ option
8. Now, you will find the form to be filled.
9. Enter the details like name of landlord, details of rent payment mode, rent amount, etc
10. Save the form and preview the details
11. Finally, submit the form

Frequently Asked Questions

Recommended Read: Income From House Property

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