Section 80GG (Rent without HRA)

Section 80GG was introduced to extend a measure of rental relief to taxpayers who do not receive HRA from their employer — typically self-employed individuals, freelancers, partners in firms, and salaried individuals working for employers who have not structured HRA into the cost-to-company package. Since the standard HRA exemption under Section 10(13A) is available only to salaried employees who receive HRA, Section 80GG fills the gap for the rest.

The deduction under Section 80GG is the least of three amounts: (a) rent paid in excess of 10% of adjusted total income; (b) 25% of adjusted total income; and (c) ₹5,000 per month (₹60,000 per year). The ₹5,000 monthly cap was revised upward from ₹2,000 by Budget 2016, and has not been revised since — making it a relatively modest benefit in cities where monthly rentals commonly exceed ₹20,000 to ₹30,000.

The taxpayer must file Form 10BA, a self-declaration, confirming that they do not own a residential property in the city where they reside and work, and that they are actually paying rent. The form is filed electronically on the income tax portal. The deduction is disallowed if the taxpayer, their spouse, minor child, or HUF of which they are a member owns a residential property in the location where they reside and work.

For equity investors and traders who work from home, Section 80GG may be applicable if they do not own the property they reside in. The adjusted total income for computing the limits excludes long-term capital gains, STCG under Section 111A, and the Section 80GG deduction itself. Given the relatively low monthly cap of ₹5,000, the maximum annual deduction is ₹60,000 — modest compared to HRA exemptions available in metropolitan cities.

Section 80GG is available only under the old tax regime. Taxpayers who have opted for the simplified new tax regime under Section 115BAC forgo the Section 80GG benefit along with most other Chapter VIA deductions.