Non-salaried individuals, including freelancers and business owners, cannot claim house rent allowance (HRA) exemption, which is exclusively available to salaried employees. However, according to reports from Mint, there is another provision in income tax law that allows these taxpayers to claim rent-related deductions. Taxpayers who pay rent for residential accommodation but do not receive HRA can claim a deduction under Section 80GG of the Income Tax Act, subject to certain conditions.
To claim this deduction, the individual must actually pay rent for a furnished or unfurnished house that is occupied as their own residence. As reported by Mint, taxpayers must also fulfill specific conditions: ITR must be filed under the old regime, a taxpayer must not have received HRA from an employer at any time during the financial year, and the taxpayer must file Form 10BA within the due date. The form must be filed online and submitted on or before July 31, 2026 for FY 2025-26, which is the due date for most individual taxpayers who do not require a tax audit.
The deduction under Section 80GG is limited to the lowest of the following amounts: ₹5,000 per month (₹60,000 per year), 25% of total income before allowing deduction under Section 80GG, or actual rent paid minus 10% of total income before allowing deduction under Section 80GG. According to Mint, to claim this deduction, taxpayers must submit Form 10BA, which serves as a declaration confirming that they meet the prescribed eligibility conditions. The form requires details such as name and PAN of the assessee, full address, tenure and rent amount, rent payment mode, landlord details including PAN if rental is above ₹1 lakh, and a declaration that no other house property is owned by the assessee or their family members.
As reported by Mint, HRA exemption and deduction under Section 80GG cannot be claimed together. Section 80GG is specifically meant for taxpayers who do not receive HRA benefit. Both the HRA exemption and the Section 80GG deduction are not available under the new tax regime. Individuals should assess their eligibility based on their employment status and salary structure before claiming either benefit, ensuring they meet all prescribed conditions for claiming the deduction under Section 80GG.
