Paying rent every month is a reality for many salaried individuals in India. What if you could reduce your taxable income just by living in a rented house? Good news — the Income Tax Act provides tax benefits for exactly this. Whether you’re claiming House Rent Allowance (HRA) or don't receive it at all, there’s a provision for you.
Let’s break down the key sections you need to know about — Section 10(13A) & Section 80GG — that offer house rent deduction in income tax.
1. What is House Rent Deduction?
House rent deduction in income tax refers to the relief provided to taxpayers who pay rent for residential accommodation. This deduction lowers your total taxable income, which in turn reduces your tax liability.
There are two major scenarios:
- You receive House Rent Allowance (HRA) from your employer — you can claim exemption under Section 10(13A).
- You do not receive HRA — you can claim a deduction under Section 80GG.
2. House Rent Allowance (HRA) — Section 10(13A)
If you're a salaried employee & your salary structure includes HRA, you're eligible to claim exemption under Section 10(13a). But HRA is not entirely taxable. The least of the following three amounts is exempt:
- Actual HRA received
- Rent paid minus 10% of the basic salary
- 50% of salary (metro cities) or 40% (non-metros)
To qualify:
- An individual should reside in a rented property
- Rent receipts are required as proof
- The exemption is applicable only for the period you paid rent “
3. No HRA? Claim Deduction Under Section 80GG
Not everyone receives HRA, especially self-employed professionals or freelancers. In such cases, Section 80GG of the Income Tax Act provides a way to claim a deduction for rent paid.
Eligibility under Section 80GG:
- You must not receive HRA during the year
- You must be paying rent for residential accommodation
- You should not own residential property at the place of employment
You can claim the least of the following:
- ₹5,000 per month (i.e., ₹60,000 annually)
- 25% of total income
- Actual rent paid minus 10% of total income
This section provides tax deductions for individuals paying house rent, even if they’re self-employed or HRA is not part of their salary. “
4. Additional Points You Should Know
- PAN of the landlord is required if the rent exceeds ₹1 lakh per annum.
- A declaration in Form 10BA is required for claiming a deduction under Section 80GG.
- You cannot claim a deduction if you or your spouse owns a property in the same city.
5. How to Maximise Your Benefit?
To make the most of the house rent deduction in the income tax section, keep the following in mind:
- Maintain proper documentation (rent agreement, rent receipts)
- If you're splitting rent, ensure clarity in who claims the deduction
- Consider using an online house rent deduction calculator to plan ahead
Also, remember — you can claim a deduction for rent paid above a certain percentage of your income, but don’t overclaim. The Income Tax Department can always seek verification.
HRA vs 80GG – A Quick Comparison
|
Criteria |
Section 10(13A) |
Section 80GG |
|
Applicable To |
Salaried with HRA |
Salaried without HRA / Self-employed |
|
Deduction Limit |
Based on salary & rent |
Max ₹60,000 per annum |
|
Form Required |
No specific form |
Form 10BA |
|
Ownership |
Cannot own a house at the work location |
Same condition |
Final Thoughts
Whether you're receiving HRA or not, you don't have to let house rent become a tax burden. Both salaried & self-employed individuals can benefit from house rent deduction in income tax by understanding & applying Section 10(13A) or Section 80GG wisely.
Still unsure which section applies to you or how much deduction you can claim?
Let our tax experts at Callmyca.com handle the calculations & filing for you — so you never miss a deduction again!
