Section 80GG is a special provision under Chapter VI-A of the Income Tax Act, 1961, which provides tax stay to those who do not avail house rent allowance. To become eligible for tax deduction under this section, an individual must be residing in a rented property. Furthermore, his/her employer should not provide home rent allowance (HRA) as part of the monthly compensation.
Section 80GG deduction is applicable to eligible salaried and self-employed professionals.
Conditions to claim deduction under section 80GG
- You are self-employed or salaried.
- You have not received HRA at any time during the year for which you are claiming 80GG HRA component should not form part of your salary to claim 80GG.
- You or your spouse or your minor child or HUF of which you are a member – do not own any residential accommodation at the place where you currently reside, perform duties of the office, or employment or carry-on business or profession.
- In case you own any residential property at any place, for which your Income from house property is calculated under applicable sections (as a self-occupied property), no deduction under section 80GG is allowed.
- You will be required to file Form-10B with details of payment of rent.
Amount of Deduction
The lowest of the following will be considered as the deduction under this section:
- Rs.5,000 per month
- 25% of the total Income (excluding long-term capital gains, short-term capital gains under section 111A and Income under Section 115A or 115D and deductions under 80C to 80U. Also, income is before making a deduction under section 80GG).
- Actual rent less 10% of Income