Rent relief for the rest of us
HRA is great, but what if you are a freelancer, business owner, or a salaried person whose package has no HRA component? You can still get a rent deduction under Section 80GG of the Old Regime.
The cap that defines 80GG
Section 80GG is capped at ₹5,000 per month, i.e. ₹60,000 a year (Source: Section 80GG, Income Tax Act). That ceiling is why 80GG saves far less than HRA can.
| 80GG test | Value |
|---|---|
| Monthly cap | ₹5,000 (₹60,000/year) |
| Income test | 25% of total income |
| Rent test | Rent minus 10% of total income |
The conditions
To claim 80GG, you must meet all of these:
- You do not receive HRA from any employer.
- You, your spouse, or minor child do not own a home in the city where you live and work.
- If you own a house elsewhere, it cannot be treated as self-occupied while you claim 80GG.
- You file Form 10BA (a short online declaration) before filing your ITR.
The deduction is the lowest of three
- ₹5,000 per month (₹60,000/year)
- 25% of total income (after other deductions like 80C, 80D)
- Actual rent paid minus 10% of total income
Example
Total income ₹8 lakh, rent ₹15,000/month:
- Cap: ₹60,000
- 25% of income: ₹2,00,000
- Rent minus 10% of income: ₹1,80,000 − ₹80,000 = ₹1,00,000
Your deduction is ₹60,000 (the lowest).
What you should do
- Confirm you receive no HRA before choosing 80GG.
- File Form 10BA on the portal first — skipping it disqualifies the claim.
- Keep rent receipts and bank proof.
Common mistake
Forgetting Form 10BA. The deduction is routinely disallowed when the declaration is not filed before the return, even if every other condition is met.
How LastMinute ITR helps
80GG is easy to overlook if you are self-employed. LastMinute ITR asks whether you pay rent, and if you have no HRA, it calculates your 80GG eligibility within your deductions and compares regimes. You file Form 10BA and the return, then e-verify, on incometax.gov.in.