Section 80GG lets an individual deduct the rent they pay when they receive no HRA — this covers self-employed people and salaried employees whose CTC has no HRA component. The deduction is the least of three amounts: (1) rent paid minus 10% of adjusted total income; (2) ₹5,000 per month (₹60,000/year); (3) 25% of adjusted total income. You must not own a home in your city of work/residence, must file Form 10BA, and can claim it only under the old tax regime.
The 80GG Formula — Least of Three
Your 80GG deduction is the lowest of the three figures below. "Adjusted total income" means your gross total income reduced by long-term capital gains, short-term gains under 111A, and other Chapter VI-A deductions — but before deducting 80GG itself.
| # | Limb of the formula | What it means |
|---|---|---|
| 1 | Actual rent paid − 10% of adjusted total income | Rewards higher rent relative to income |
| 2 | ₹5,000 / month = ₹60,000 / year | The hard cap since Budget 2016 — usually the binding limit |
| 3 | 25% of adjusted total income | A proportional ceiling on the claim |
| → | Deduction = least of 1, 2 and 3 | Take the smallest of the three amounts |
The ₹5,000/month cap (limb 2) most often limits urban renters; low-rent or high-income cases are usually capped by limb 1.
80GG on ₹6,000/mo Rent, ₹6L Income
The three limbs computed
If rent were ₹12,000/mo instead
Limb 1 subtracts 10% of your income from the rent — not the other way round. If your annual rent is less than 10% of your adjusted total income, limb 1 becomes zero or negative and you get no 80GG deduction at all, however high the ₹5,000/month cap is.
Eligibility Conditions for Section 80GG
80GG is available only to individuals and HUFs (not companies or firms). Every one of these conditions must hold for the year you claim:
- You actually pay rent for a home used for your own residence
- You receive no HRA at any time during the year
- You are salaried without an HRA component, or self-employed / a professional
- You, your spouse or minor child (or your HUF) do not own a home in your city of work or residence
- You do not own a home elsewhere claimed as self-occupied under Section 24
- You file Form 10BA before or while filing your ITR
✓You can claim 80GG if
- You are self-employed and pay rent
- Your salary/CTC has zero HRA
- You live in rented accommodation in your work city
- You own no house where you live/work
!You cannot claim 80GG if
- You receive HRA (claim Section 10(13A) instead)
- You / spouse / minor child own a home in that city
- You claim another home as self-occupied u/s 24
- You have opted for the new tax regime
Not sure whether HRA or 80GG applies to you?
Ask a TaxClue expert →Section 80GG vs HRA Exemption
80GG and the HRA exemption are mutually exclusive. If HRA is part of your salary you use HRA under Section 10(13A); if it is not, 80GG is your route. HRA is usually the bigger benefit because it scales with salary.
No HRA in your pay
- For self-employed & no-HRA salaried
- Hard cap of ₹5,000/month (₹60,000/yr)
- Cannot own a home in your city
- Requires Form 10BA declaration
- Old regime only
HRA in your salary
- For salaried employees who receive HRA
- No fixed cap — scales with salary (50%/40%)
- Can own a home (unless self-occupied claim)
- Needs rent receipts & landlord PAN if rent > ₹1L
- Old regime only
| Parameter | Section 80GG | HRA — Section 10(13A) |
|---|---|---|
| Who claims | Self-employed & no-HRA salaried | Salaried receiving HRA |
| Maximum | ₹60,000/yr | Least of HRA, 50%/40% salary, rent−10% — often far higher |
| Ownership bar | No home in city of work/residence | Only if self-occupied deduction claimed |
| Paperwork | Form 10BA (online) | Rent receipts + landlord PAN if rent > ₹1L/yr |
| Old regime | Available | Available |
| New regime | Not available | Not available |
You can never claim both in the same year — the presence of an HRA component in your salary decides which one applies.
80GG Under Old vs New Tax Regime
The new tax regime is the default from FY 2023-24 and disallows almost all Chapter VI-A deductions — including 80GG, 80C and 80D. To claim 80GG you must opt for the old regime when filing.
- Old regime: 80GG allowed, plus 80C/80D and HRA — best where rent and other deductions are large.
- New regime: 80GG not allowed, but wider slabs, ₹75,000 standard deduction (salaried) and an 87A rebate making income up to ₹12 lakh effectively tax-free.
- Compare both with the income tax calculator before locking your regime for the year.
Form 10BA — The Mandatory Declaration
Form 10BA is an online self-declaration filed on the income tax e-filing portal, not a physical form. It must be filed before or at the time of filing your ITR; without it the 80GG deduction can be disallowed.
- 1Log inAt incometax.gov.in e-filing portal
- 2Open Form 10BAUnder e-File → Income Tax Forms
- 3Declare detailsRent, landlord, address & no-ownership
- 4Submit then file ITRClaim 80GG in the old-regime return
Where rent is paid in cash and total rent exceeds ₹1 lakh a year, you must report the landlord's PAN in Form 10BA. Missing or wrong PAN is a common reason 80GG claims are queried, so keep rent receipts and a rent agreement on file.
- Section 80GG & Form 10BA: incometax.gov.in
- Deduction limit ₹5,000/month: Finance Act 2016 (w.e.f. AY 2017-18)
- New-regime deduction bar: Section 115BAC, Income-tax Act 1961
- HRA exemption: Section 10(13A) & Rule 2A
Disclaimer: This guide is general information based on the law and notifications in force when it was last updated. It is not professional advice for your case — rates, thresholds and due dates change, so check the current position or speak to our CA team before you act on it.