Deductions under section 80GG

Section 80GG of the Income-tax Act provides a deduction for rent paid by individuals who do not receive House Rent Allowance (HRA) from their employer and who are not claiming any HRA-related exemption under Section 10(13A). For FY 2026-27, this provision continues to be a useful relief for self-employed professionals, business owners, and salaried employees whose CTC does not include an HRA component. Importantly, Section 80GG is available only under the old tax regime, so taxpayers must choose deliberately.

Eligibility conditions

• The taxpayer must be an individual — Hindu Undivided Families and other entities are not eligible.
• The taxpayer must be paying rent for residential accommodation occupied by them.
• Neither the taxpayer, spouse, minor child, nor HUF of which they are a member should own residential property at the place of employment or business.
• If they own a property at any other location, they should not have claimed it as self-occupied (it must be treated as let-out).
• The taxpayer must not be in receipt of HRA from any employer during the year.
• A declaration in Form 10BA must be furnished electronically on the income-tax portal before filing the return.

Quantum of deduction

The deduction under Section 80GG is the lowest of the following three amounts: (i) ₹5,000 per month, i.e., ₹60,000 per year; (ii) 25 per cent of the adjusted total income; or (iii) actual rent paid minus 10 per cent of adjusted total income. Adjusted total income means gross total income before deductions under Section 80GG and certain other specified provisions.

Worked example

Assume a freelance consultant in Bengaluru with adjusted total income of ₹10 lakh and annual rent of ₹3 lakh paid for a flat. The three computations are: (i) ₹60,000 fixed cap; (ii) 25 per cent of ₹10 lakh = ₹2.5 lakh; (iii) ₹3 lakh minus 10 per cent of ₹10 lakh = ₹3 lakh − ₹1 lakh = ₹2 lakh. The lowest is ₹60,000, which becomes the allowable deduction. The ₹60,000 cap is the binding constraint for most metro renters.

Form 10BA — the mandatory declaration

1. Log in to www.incometax.gov.in with your PAN credentials.
2. Navigate to e-File → Income Tax Forms → File Income Tax Forms.
3. Select Form 10BA under the relevant category for the assessment year.
4. Enter landlord's name, complete address, PAN (if rent exceeds ₹1 lakh per annum), and rent paid.
5. Confirm the declarations about non-ownership of residential property and non-receipt of HRA.
6. Verify using DSC or Aadhaar OTP and submit before filing the ITR.

Common pitfalls

Many taxpayers forget to file Form 10BA before the ITR and find their 80GG claim disallowed by CPC at processing. Another common error is claiming both 80GG and HRA — even partial HRA receipt during the year disqualifies the entire 80GG claim for that year. If you own a property in your name in the same city where you work and live on rent (often for office proximity), the deduction is denied. Tenants paying rent to parents must show genuine cash flow and ideally a rent agreement; CBDT has flagged misuse here.

Interaction with the new tax regime

Since Section 80GG is not available under the new regime, taxpayers must compare the tax saved by the 80GG deduction with the lower slab benefits of the new regime. For most renters whose binding constraint is the ₹60,000 cap, the new regime usually wins unless they have a stack of other deductions. Run the side-by-side calculation each year before filing.

Conclusion

Section 80GG is a niche but valuable deduction for the right taxpayer profile — typically the self-employed renter living in a city without owning property. The ₹60,000 cap is modest, but every rupee counts when combined with other 80C and 80D deductions under the old regime. File Form 10BA, keep rent receipts and the rent agreement, and ensure your bank trail supports the deduction.