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Section 80GG

A provision of Income Tax Act for availing benefit of rent paid subject to certain conditions, for the people whom HRA benefit is not applicable/available .

Section 80 GG of the Income Tax Act is not very popularly discussed section. The reason for this section being ignored must be that the benefit of this section is available to a small number of people satisfying the conditions of this section. Lets discuss the provisions of Section 80GG in detail:

Amount of deduction available:

Least of the following will be available as deduction u/s 80GG
  • Rs. 5000 per month (Budget 2016 has increased the limit of rent from Rs. 2000 per month to Rs. 5000 per month, applicable from financial year 2016-17)
  • 25% of individual's total income
  • An amount equal to Rent paid in excess of 10% of individual's total income (ie. Rent paid minus 10% of total income)
Here Total Income means total income of a person from all sources and shall be calculated before giving effect to any deductions from Section 80C to 80U of The Income Tax Act.

Who is eligible for deduction U/s 80GG:

To be eligible to avail this deduction following conditions must be satisfied:
  • No HRA shall be claimed
  • The  assessee himself, his/her spouse or minor child shall not own a residential house property at the place of his work/employment/business
  • If assessee is a member of a HUF then such HUF shall not own a a residential house property at the place of his work/employment/business
  • If the assessee owns a residential house property at any other place then he/she should not claim any benefits of that hosue as self occupied property.  
  • A declaration in Form 10BA regarding eligibility of availing this deduction shall be filed with the Income Tax Authorities. This form can be downloaded from Income Tax Department's website. 
In simple words to avail this deduction; if I own a house it should not be at my regular place of work and also I can not show the house as a self occupied house in my Income Tax return. 
These requirements make section 80GG less popular and less used by assessees. Still this section shall be kept in mind and can be of use for many people who do not own a house and where employers do not give them HRA benefits.

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Some Quick Links:
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Deduction u/s 80DDB for medical expenses on specified diseases
Deduction for Interest on Education Loan u/s 80E
Deduction U/s 80U to the differently abled
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