An individual can claim tax deduction under section 80GG of the Income tax act, 1961, for house rent paid during the financial year.
Section 80GG has specified certain conditions to get eligible for tax deduction. In this article we will discuss who can claim tax deduction for house rent payments, amount of deduction and How to claim tax deduction under section 80GG.
Who can claim tax deduction under section 80GG
As per section 80GG an individual who pays rent for a residential accommodation for himself and family can take benefits of this section. The individual can be a self-employed person or an employee.
In case of an employee, to claim section 80GG deduction, he/she should not be getting house rent allowance (HRA) from the employer. This means if the employee is getting house rent allowance (HRA) from his/her employer, then he/she is not eligible for section 80GG tax deduction.
How to claim tax deduction under section 80G for house rent
In order to claim section 80GG tax deduction for house rent payments, the taxpayer is required to submit a declaration in form No 10BA electronically to the assessing officer whenever he wants to examine it.
To claim the tax deduction, the taxpayer is required to file income tax return form the financial year and satisfy all the conditions of section 80GG. In Chapter VI-A deduction of the income tax return, he/she has to claim tax deduction as per his/her eligibility under section 80GG.
When section 80GG tax deduction not allowed
If the taxpayer or spouse or his/her minor child owns any residential accommodation at the place where the taxpayer resides, performs the duties of his office, or employment or carries on his business or profession, then such person is not allowed to claim tax deduction under section 80GG for the house rent paid during the financial year.
Minor child include a minor step child and minor adopted child.
If the hindu undivided family in which you are a member owns any residential house at the place where you reside, performs your duties of office, or employment or carries on your business or profession, then you are not eligible for section 80GG tax deduction.
In case the taxpayer owns a residential accommodation in a place other than those discussed above, then in respect of that house the concession in respect of self-occupied property not claimed by him.
Amount of tax deduction on house rent under section 80GG
As per section 80GG, least of the following will be allowed as tax deduction;
- 5,000 rupees per month;
- 25% of taxpayer’s total income
- the excess of actual rent paid over 10% of total income
Total income = Gross total income – long term capital gain – short term capital gain – deduction under section 80C to 80U (not being section 80GG) – income under section 115A
Please note, to claim house rent as tax deduction, it must have been paid during the financial year.
For instance, if you want to claim tax deduction for house rent under section 80GG for the financial year 2023-24 (assessment year 2024-25), then such rent paid by you for the period starting from 1st April 2023 to 31st March 2024 should be taken into account to calculate tax deduction under section 80GG. If its not paid, then the tax deduction will be Zero. Same provision is applicable to the financial year 2022-23 (assessment year 2023-24).
Note: If you have opted to pay tax under the alternative tax regime under section 115BAC, then tax deduction under section 80GG is not available to you.
