Applicable to: Salaried (without HRA) & Self-Employed Individuals
This section provides tax relief for rent payments made by taxpayers who do not receive House Rent Allowance (HRA) from their employer.
Key Features (AY 2025-26)
1. Eligibility Criteria
- Must NOT receive HRAfrom employer at any time during the year.
- Must NOT own a housein the city of employment:
- If you own a home in another city, you can still claim.
- Rent must be paid for residential accommodation(not commercial).
2. Deduction Calculation
Least of the following is allowed:
- ₹5,000 per month(₹60,000 per year)
- 25% of Adjusted Gross Total Income(AGTI = Total Income – Long-Term Capital Gains – Section 80 deductions except 80GG)
- Actual rent paid minus 10% of AGTI
3. Required Documents
✅ Rent agreement (not mandatory but recommended)
✅ Rent receipts (with landlord’s PAN if rent > ₹1 lakh/year)
✅ Bank transfer proofs (for rent payments > ₹1 lakh/year)
Illustrative Example
Case:
- Annual income (after other deductions): ₹6 lakh
- Annual rent paid: ₹1.2 lakh
Calculation:
- ₹60,000 (max limit)
- 25% of ₹6 lakh = ₹1.5 lakh
- ₹1.2 lakh – (10% of ₹6 lakh = ₹60k) = ₹60k
Final Deduction = ₹60,000 (least of the three)
Comparison with HRA Benefit
| FEATURE | SECTION 80GG | HRA (SECTION 10(13A)) |
| Who Can Claim? | Non-HRA recipients | Salaried employees with HRA |
| Max Benefit | ₹60,000/year | No fixed limit (depends on salary) |
| Ownership Impact | Cannot own home in work city | No restriction |
| Proof Required | Rent receipts + PAN (if rent > ₹1L) | Rent receipts + landlord PAN (if rent > ₹1L) |
Pro Tips
- Negotiate rent below ₹1 lakh/yearto avoid PAN submission.
- Use NEFT/Chequefor rent payments > ₹1 lakh/year (cash not allowed).
- Combine with other deductions(e.g., 80C, 80D) to reduce AGTI.
FAQs
Q: Can I claim 80GG if I live with parents?
A: Yes, if you pay rent to them and they declare it as income.
Q: Is this available for NRIs?
A: Yes, if they meet all conditions.
Q: Can I claim both HRA and 80GG?
A: No, only one is allowed.
Section 80GG helps non-HRA earners save up to ₹60,000/year on rent. While less flexible than HRA, it’s valuable for self-employed professionals and salaried workers without housing allowances.
