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All you need to know about: House Rent Allowance and 80GG

Updated: Feb 4, 2021

All salaried people who live in a Rented house can claim House Rent Allowance for tax benefit. When any salaried person receiving HRA doesn't live in a rented house, then such HRA is fully taxable in the hands of the employee.

House Rent Allowance (80GG)

What if the employer is not providing HRA for rented accommodation?

In such a case, where an employee isn't receiving HRA, still he can claim a deduction for the rent paid under section 80GG. Not only salaried person, even self employed persons can claim deduction under 80GG.

For claiming deduction under 80GG, you must fulfill the following conditions:

  • You must be self employed or salaried.

  • No HRA is being received at any time during the year for which you are claiming deduction under 80GG.

  • Any residential property should not be owned at the place where you currently reside, or do your job or employment, or carrying on business or profession  by you or your spouse or minor child or HUF (of which you are a Member).

"If you have any property in any other area then benefit of self occupied property can not be claimed for  that property, it will be considered as deemed let out in order to calculate deduction under 80GG."

How to claim deduction under 80GG?

The least  of the following will be considered as the deduction under this section:

a. Rs 5,000 per month; b. 25% of adjusted total income*; c. Actual Rent less 10% of adjusted total Income*

*Adjusted Total Income means Total Income Less long-term capital gain, short-term capital gain under section 111A (i.e short term capital gain on Shares or Unit of equity oriented Funds) and Income under section 115A (specifiied dividends and Interest) or 115D (Special provision for computation of total income of non- residents) and deductions 80C to 80U (except deduction under section 80GG).

Now, what if I am paying Interest on Home Loan and also receiving HRA for rented property? Can I Claim both?