80GG is an Income Tax deduction falling under Chapter VI-A of the Income Tax Act, 1961. The sole aim behind launching 80GG is to offer relief to the individuals who don't receive home rent allowance from their workplace but are paying the rent all by themselves.

To claim a tax deduction under Section 80GG, a professional should either be salaried or self-employed. Section 80GG enables professionals to apply for deductions on the rent paid towards home. However, remember that the rent paid shall specifically be for their stay and not for someone else.

Tax Deduction under Section 80GG:

The conditions that are required to be met to claim income tax deduction under this section are as given below:
  • The individual shouldn't be a recipient of House Rent Allowance from his employer.
  • The individual has filed for and declared in Form No. 10BA.
  • The assesse or their spouse or child or HUF, shouldn't own any house under their name or own residential property where they ordinarily reside, or near the place where he goes to work or runs his profession.
  • The assessee shouldn't own residential accommodation in their occupation, or at any other location, whose valuation is determined as per Sec 23(4)(a) or Sec 23(2)(a).

In easier words, if Mr. A, claims a deduction in his income tax return in respect of his self-occupied property and pays rent towards a place in which he usually resides, Mr. A will not qualify for claiming HRA exemption under Section 80GG.

Determination of the quantum of deduction will be the least of the following:

  • Rs. 5000/- per month
  • The actual amount of rent paid minus 10 percent of the adjusted total income.
  • Adjusted Total Income's 25 percent.

Exceptions under Section 80GG:

  • If the location of the house is situated where they are employed or runs the business, a person would not qualify to claim a deduction on his house rent.
  • If an individual is already claiming the benefit of an owned home as self-occupied property in another location, that individual cannot claim a deduction on house rent.
  • If a person is living in a city and has a home in another place or town, that will be considered as rented out.
  • If a person is residing with their parents in their home, they can easily claim the benefit of rent deduction as per the section 80GG.

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The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.

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