If you do not get HRA but pay rent, you can claim tax relief under Section 80GG of the Income Tax Act. Perhaps you can bring down your income tax liability significantly if you meet the Section 80GG eligibility criteria.
Section 80GG of the Income Tax Act provides relief for a person who does not receive a home rent allowance (HRA) from the employer. If your salary comprises an HRA payment, you cannot receive income tax rebates pertaining to housing rent.
You need to meet the following conditions to claim deductions available under this section of 80GG Income Tax Act:
There are ways to potentially claim deductions on rent paid. Here is how you can take advantage of this tax benefit:
To understand what is 80GG in income tax, it's essential to know who can avail of this deduction. You should be a salaried individual or business owner to claim an income tax deduction for rent under this section. In case you're salaried, your employer should not be offering a home rent allowance as part of your monthly salary.
Section 80GG can help you deduct rent payments, but it comes with specific rules. Check them out below:
| Criteria | Requirement |
|---|---|
| Employment Status | Salaried (without HRA) / Self-Employed |
| Property Ownership | Should not own a house in the work location |
| Rent Amount | Must exceed 10% of ATI |
| Maximum Deduction | ₹60,000 annually |
| Tax Return Requirement | Must file Form 10BA |
To make the process smooth, you'll need a few key documents. These include:
Check Also: Must-Know Tax Deductions for Smart Financial Planning
For example, if your rent is ₹10,000 per month, and your total income is ₹5 Lakh, here is how much deduction you can get under Section 80GG:
The deduction is the least of the following three amounts:
Least of the three amounts: ₹60,000
So, the deduction under Section 80GG would be ₹60,000.
Here are the steps to file this deduction and potentially lower your taxable income:
While rent deductions aren’t always straightforward, there are some important factors that determine whether you qualify. These include:
Check Also: Tax Deductions Vs Salary Exemptions Differences You Need To Know
From 80C to 80D and beyond, there are plenty of ways to keep more money in your pocket while staying on the right side of the taxman. Here is how you can maximise your tax benefits:
Here are some strategies to maximize your tax benefits and make the most of your rental property:
Claiming rent deductions can really lighten your tax burden, but it's super important to get it right. There are a few common mistakes that can raise red flags, including:
| Mistake | Impact |
|---|---|
| Not filing Form 10BA | Deduction rejection |
| Claiming HRA and 80GG | Not allowed |
| Incorrect Rent Receipts | May trigger tax scrutiny |
| Not providing PAN of the landlord (if rent is greater than ₹1 lakh/year) | The deduction may be disallowed |
Section 80GG is a great tax-saving tool if you don’t receive HRA but pay rent. Make sure to calculate correctly, maintain proper documentation, and file your returns on time to maximise your benefits.
Under Section 80GG, you can claim a deduction for the rent you pay. But keep in mind that you will be ineligible for this if you receive HRA.
Any self-employed or salaried person who does not draw HRA and stays in a rented accommodation.
This is the least of the following: ₹5,000 per month, 25% of total income, or rent paid minus 10% of total income.
Yes, you can claim Section 80GG along with other eligible deductions under the Income Tax Act.
You should not receive HRA, you should be staying in rented accommodation, and you should file Form 10BA to claim the deduction.
The maximum deduction allowed is ₹60,000 per year (₹5,000 per month).
No exemptions, but salaried individuals without HRA can claim this deduction if they meet the conditions.
