Meaning

80GG of the Indian Income Tax Act that provides tax benefits to individuals who do not receive any House Rent Allowance (HRA) from their employer but still incur rental expenses.

Eligibility

• Must be an Individual not receiving HRA from Employer.
• The Individual should not own a house property himself, his spouse or minor child in the city of work.
• The individual should be paying rent for a residential accomodation.

Deduction allowed

Deduction allowed would be minimum of:

• Rent paid minus 10% of the taxpayer's total income.
• Rs. 5,000 per month.
• 25% of the taxpayer's total income((Excluding Long term Capital Gain (LTCG),short term capital gains u/s 111A and Income u/s 115A or 115D and deductions u/s 80C to 80U)

E.g:- An individual's total income for the year is Rs. 6 lakhs and they paid Rs. 10,000 per month towards rent. The maximum deduction they can claim under Section 80GG would be calculated as follows:

• Rent paid- 10% of Total Income= (Rs. 10,000 x 12 months = Rs. 1,20,000)-(Rs.(10% of Rs.600000))= Rs. 60000  
• Rs. 5,000 per month: Rs. 5,000 x 12 months = Rs. 60,000
• 25% of total income: 25% of Rs. 6,00,000 = Rs. 1,50,000

The least of the above three amounts is Rs. 60,000, which would be the maximum deduction that the individual can claim under Section 80GG.

Form 10 BA

Form 10BA of Indian Income Tax form that is used to claim a deduction for the rent paid when an employee is not receiving any House Rent Allowance (HRA) from their employer.

• The form must be filled out by the taxpayer (i.e. the employee) and submitted along with their income tax return for the relevant financial year.
• The taxpayer must meet the eligibility criteria for claiming a deduction under Section 80GG of the Income Tax Act.
• The form requires details such as the taxpayer's name, PAN, address, details of the rented property, rent paid, and the landlord's name and PAN.

Can 80GG deduction be claimed if residing in parents house property?

Yes, the deduction under this section can be claimed if the assessee is residing in a house property owned by the parent of the assessee if rent is paid to them and there is a rental agreement.