Introduction
Most rent-related tax advice in India assumes one thing: that your employer pays you House Rent Allowance (HRA). If you are a freelancer, a consultant, or a salaried employee whose salary slip has no HRA line at all, the HRA exemption is useless to you — but that does not mean your rent gives you no tax relief.
Section 80GG of the Income-tax Act exists for exactly this gap. It lets an individual who pays rent but receives no HRA deduct part of that rent from taxable income. The cap is modest — ₹5,000 a month — and there is an extra declaration to file. Get the conditions right, though, and a salaried person with no HRA or a self-employed professional can shave up to ₹18,720 off their tax bill every year.
What is the 80GG deduction? It is a tax deduction for individuals who pay rent for their own residence but receive no House Rent Allowance. The claimable amount is the lowest of: ₹5,000 per month (₹60,000 a year), 25% of adjusted total income, or rent paid minus 10% of adjusted total income. Old regime only; Form 10BA filing is mandatory.
Who Can Claim Section 80GG?
Two groups use this section the most: salaried employees whose employer simply does not include an HRA component in the salary structure (common at startups and small firms), and self-employed professionals, freelancers and consultants who have no salary structure at all. But “no HRA” alone is not enough — every one of these conditions must hold together:
| Condition | What it means |
|---|---|
| Individual taxpayer | Only individuals can claim. HUFs, companies and firms cannot. |
| Rent paid for own residence | The rented house or flat must be the place you actually live in. Commercial rent does not qualify. Furnished or unfurnished, both are fine. |
| No HRA received | You must not have received any House Rent Allowance from an employer during the year. Even a small HRA amount disqualifies the whole claim. |
| No owned house at your place | You, your spouse, your minor child, or the HUF you belong to must not own any residential accommodation at the place where you live or work. |
| Owned house elsewhere | If you own a residential property in a different city, you can still claim — but that property must be treated as deemed let out, not self-occupied. |
| Form 10BA filed | The declaration confirming these conditions must be filed online before you file your income-tax return. |
Miss even one condition and the deduction fails. The most common disqualifier is simple: the person received HRA. If HRA appears on your salary slip, you use the HRA exemption (now Section 11 of the new Act) instead — you cannot use 80GG for the same rent.
How Is the 80GG Deduction Calculated?
The deduction is the lowest of three tests:
- Flat ceiling — ₹5,000 per month, i.e. ₹60,000 per year.
- Percentage test — 25% of adjusted total income.
- Rent-minus-10% test — actual rent paid during the year minus 10% of adjusted total income.
Adjusted total income is your gross total income minus deductions under other Chapter VI-A sections (80C, 80D, 80TTA and so on) and minus capital gains. In plain terms: compute your income as if 80GG did not exist, then apply the three tests to that figure.
Worked example
| Item | Amount |
|---|---|
| Adjusted total income | ₹5,00,000 |
| Monthly rent | ₹15,000 |
| Annual rent paid | ₹1,80,000 |
- Test 1 (flat ceiling): ₹5,000 × 12 = ₹60,000
- Test 2 (25% of income): 25% × ₹5,00,000 = ₹1,25,000
- Test 3 (rent minus 10%): ₹1,80,000 − ₹50,000 = ₹1,30,000
The lowest is ₹60,000 — so the deduction is ₹60,000.
Notice what happens with cheaper rent. If the same person paid only ₹8,000 a month (₹96,000 a year), Test 3 becomes ₹96,000 − ₹50,000 = ₹46,000, which is lower than the ₹60,000 ceiling. The deduction drops to ₹46,000. The flat ceiling only bites when your rent is high enough.
How to File Form 10BA (Step by Step)
Form 10BA is a self-declaration, not an application. You file it on the income-tax e-filing portal before submitting your return:
- Log in to incometax.gov.in and go to e-File → Income Tax Forms → File Income Tax Forms.
- Select the assessment year and search for Form 10BA.
- Fill in your details, the rented property address, the rent paid, the landlord’s name and address, and the landlord’s PAN if your annual rent exceeds ₹1 lakh.
- Verify with Aadhaar OTP or EVC and submit.
- Note the acknowledgement number — you enter it in Schedule 80GG while filing your ITR.
Nothing is attached to the return itself; you do not upload rent receipts with the e-return. But keep them — receipts, the rent agreement and bank-transfer proof are what you show if the return is ever picked up for scrutiny.
What Changed and What Stayed
The ₹5,000 ceiling (Finance Act 2016)
The monthly ceiling was raised from ₹2,000 to ₹5,000 by the Finance Act 2016, and it has stayed at ₹5,000 ever since. The annual cap of ₹60,000 has not moved.
New Income-tax Act 2025 mapping
| Old provision | New provision (from Tax Year 2026-27) |
|---|---|
| Section 80GG | Section 134 |
| Form 10BA | Form 31 |
| Section 80C | Section 123 |
| Section 115BAC (new regime) | Section 202 |
For income of FY 2025-26 (reported in AY 2026-27) the 1961 Act still applies, so you continue with Section 80GG and Form 10BA. From Tax Year 2026-27 onwards, the same deduction lives at Section 134 with Form 31.
Old regime only — unchanged
The deduction is allowed only under the old tax regime. The new default regime (Section 115BAC, now Section 202) does not permit any 80GG claim. If you are deciding between regimes, factor this in: the full ₹60,000 deduction is worth up to ₹18,720 in tax saved at the 30% slab, which can flip a close regime comparison.
Practical Impact
Rupee savings at the full ₹60,000 deduction
| Old-regime slab | Effective rate (with cess) | Tax saved |
|---|---|---|
| 30% | 31.2% | ₹18,720 |
| 20% | 20.8% | ₹12,480 |
| 10% | 10.4% | ₹6,240 |
The deduction reduces taxable income, not tax directly — so its rupee value depends on your slab. A freelancer earning ₹9 lakh in the old regime saves ₹12,480 a year from this one deduction.
Documents to keep ready
- Rent receipts — monthly or quarterly. Receipts above ₹5,000 a month should carry a ₹1 revenue stamp.
- Rent agreement — registered if your state requires it.
- Bank statements showing rent transfers (cash rent is harder to defend).
- Landlord’s PAN — required when your annual rent exceeds ₹1 lakh.
- Form 10BA acknowledgement — the number you quote in the return.
- If monthly rent crosses ₹50,000, the tenant must also deduct TDS on rent (Section 194-IB, 2%) and deposit it via Form 26QC — see our TDS on rent guide.
Frequently Asked Questions
Can a salaried employee without HRA claim Section 80GG?
Yes, provided the salary structure genuinely has no HRA component for the whole year and all other conditions are met. This is the most common 80GG claimant: an employee at a startup or small company whose CTC is a single consolidated figure. Check your salary slip and Form 16 — if HRA appears anywhere in the year, the claim fails.
Can freelancers and self-employed people claim 80GG?
Yes. The section was written with them in mind, since they have no employer and therefore no HRA to exempt. A freelancer paying rent for a flat in the city where she works can claim the deduction as long as she, her spouse and her minor children own no residential property in that city, and she files Form 10BA.
Can an HUF claim the 80GG deduction?
No. The section applies only to individuals, and Form 10BA is an individual declaration. A Hindu Undivided Family paying rent cannot use 80GG.
Can I claim 80GG in the new tax regime?
No. Section 80GG is a Chapter VI-A deduction, and the new default regime (Section 115BAC, now Section 202 of the 2025 Act) does not allow it. Before choosing a regime, compare properly — our old vs new regime guide walks through the break-even math.
What happens if I receive HRA for only part of the year?
The strict reading is that any HRA in the year disqualifies the claim — tax portals uniformly advise that no HRA should have been received during the year. If you changed jobs mid-year and the new salary has no HRA, get a chartered accountant to assess the month-wise position before claiming, and keep both salary slips as proof.
Can I claim 80GG if I own a house in another city?
Yes. Owning property in a different city does not block the claim. But that property must be treated as deemed let out in your return — you cannot keep valuing it as self-occupied while claiming 80GG on rent elsewhere.
Is rent paid to parents eligible under 80GG?
Most practitioners accept it, with conditions. The rent must be genuinely paid (bank transfer, not cash), your parent must declare it as rental income in their return, and you should keep a written rent agreement and receipts. A few tax sites discourage it because of the ownership test — so documentation is everything here. The same logic our HRA guide covers for rent-to-parents applies.
What is Form 10BA and when must I file it?
Form 10BA is the mandatory online declaration in which you confirm that you meet all 80GG conditions. File it on the e-filing portal before you file your income-tax return for the year. The acknowledgement number goes into Schedule 80GG of your ITR. Filing the return without it can get the deduction disallowed.
Official Sources
- https://incometax.gov.in — Income Tax Department e-filing portal (Form 10BA filing, ITR)
- https://incometaxindia.gov.in — Income Tax Department (forms, rules, notifications)
- https://indiacode.nic.in — India Code (Income-tax Act 1961 and Income-tax Act 2025 text)
Reviewed by Asuthod Rathod, CA
Last updated: 20 October 2026
Disclaimer: This article provides general information only and is not professional tax advice. Tax rules change; verify the current provisions or consult a qualified chartered accountant before relying on them.
Editorial byline for eircicai tax saving guides — covering 80C investments, ELSS, PPF, NPS, and regime comparison. Content is reviewed by Asuthod Rathod, CA.