Section 80GG Data Feeding and Calculations

Zen IT || Process for Entering and Calculating Deduction under Section 80GG


Section 80GG of the Income Tax Act provides a deduction for individuals who do not receive a house rent allowance (HRA) but are paying rent for residential accommodation. This document outlines the eligibility criteria, data entry process, and calculation methodology for claiming this deduction.

Eligibility Criteria
To claim a deduction under Section 80GG, the following conditions must be met:
  1. The individual, their spouse, or minor child should not own any residential property in the location where they are paying rent.
  2. The deduction is applicable only to resident individuals and Hindu Undivided Families (HUFs).
  3. The individual must be paying rent for accommodation that is not owned by them or their immediate family members.

Process for Entering Deduction under Section 80GG
To input the deduction details, follow these steps:
  1. Navigate to Transactions → Deductions.



  2. Select 80GG Details.



  3. Enter the following information manually:
    1. Number of months for which rent is paid
    2. Total rent paid
    3. Total income (for deduction calculation)



  4. Generate the computation to calculate the eligible deduction as per the provisions of the Income Tax Act.
Calculation Methodology for Section 80GG
The maximum deduction available under Section 80GG is the lowest of the following three amounts:
  1. Rent paid minus 10% of total income
  2. Rs. 5,000 per month (i.e., Rs. 60,000 per year)
  3. 25% of total income
Illustrative Example
Consider the following scenario:
  1. Monthly rent paid: Rs. 12,000
  2. Total annual income: Rs. 6,00,000
Step-by-Step Calculation
  1. Rent paid minus 10% of total income
    1. Annual rent paid = Rs. 12,000 × 12 = Rs. 1,44,000
    2. 10% of total income = 10% of Rs. 6,00,000 = Rs. 60,000
    3. Net eligible amount: Rs. 1,44,000 - Rs. 60,000 = Rs. 84,000
  2. Fixed maximum deduction under Section 80GG
    1. Rs. 5,000 per month × 12 months = Rs. 60,000
  3. 25% of total income
    1. 25% of Rs. 6,00,000 = Rs. 1,50,000
The deduction under Section 80GG will be the lowest of the three calculated amounts:
  1. Eligible Deduction Amount = Rs. 60,000


This is the amount that can be claimed as a deduction while filing income tax returns under Section 80GG.

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