SECTION 80GG- TAX DEDUCTION ON HOUSE RENT

Section 80GG Deduction – Income Tax Act

Section 80GG deduction under Income Tax is available for taxpayers who do not have HRA. As the majority of individuals taxpayers file for income tax return claiming HRA, Section 80GG deduction is applicable only for a select amount of taxpayers. 

Section 80GG Deduction Eligibility

Section 80GG deduction can be claimed by individuals who do not receive House Rent Allowance or HRA. For a taxpayer to claim Section 80GG deduction, the following conditions must be satisfied

• HRA has not been claimed by the taxpayer.
• The taxpayer or spouse or minor child should not own a residential house property which is also a place of business.
• If the taxpayer is a member of a HUF then the HUF should not own a residential house property which is also a place of business.
• If the taxpayer owns a residential house property at any other place, then the taxpayer should not claim any benefits under the Income Tax Act as self-occupied property.
• A declaration in Form 10BA regarding the eligibility of availing this deduction should be filed with the Income Tax Authorities.

Amount of Deduction under Section 80GG

Under Section 80GG, the taxpayer can claim a deduction that is the lowest of the following three amounts:

• Rs. 5000 per month (Budget 2016 has increased the limit of rent from Rs. 2000 per month to Rs. 5000 per month)
• 25% of an individual’s total income.
• Rent paid in excess of 10% of an individual’s total income (ie. Rent paid minus 10% of total income)

While calculating the amount of deduction, total Income means total income of a person from all sources and is calculated before giving effect to any deductions from Section 80C to 80U of The Income Tax Act.

Who can Claim Section 80GG Deduction

Section 80GG deduction can be claimed by taxpayers who do not own a house and employers do not give them HRA benefits. For such taxpayers, section 80GG deduction can be used for reducing the amount of income tax applicable.