Deduction in respect of rent paid: [Section-80GG]
Where you are a salaried employee and receiving HRA, such HRA forms part of the salary and deduction in respect of house rent paid can be claimed therefrom. But even if you are not a salaried employee, you can still claim deduction for house rent paid. Section-80GG of the Income tax Act, 1961 provides for deduction for house rent in case of non-salaried assessee which we will discuss in detail as below:
Eligibility to claim deduction under section-80GG??
• Any Individual (whether self-employed or salaried)
• Such individual should not be in receipt of any House Rent Allowance (HRA) at any time during the financial year from his employer
Conditions for claiming deduction under section-80GG
• He or his spouse or minor child (including step child or adopted child) or the HUF of which he is a member, does not own any residential accommodation, at the place where he ordinarily resides or performs duties of his office or carries on his business or profession and
• If the taxpayer owns any residential accommodation at any other place, such house property is not claimed as self-occupied u/s 23(2) (a) or 23(4) (a) of Income tax Act, 1961 and
• The taxpayer shall file a declaration in Form No. 10BA online on Income Tax E-filing Portal
You can download Form No. 10BA at:- https://www.incometaxindia.gov.in/Pages/downloads/forms.aspx
Quantum of deduction allowed under section-80GG
The deduction allowed under section-80GG shall be the least of the following:-
(a) Rent paid minus 10% of adjusted total income
(b) Rs. 5,000 per month (Rs. 60,000 per annum)
(c) 25% of adjusted total income
What is the meaning of adjusted total income under section-80GG??
|
Gross Total Income(Total income under all heads before deductions) |
xxx |
| Adjusted Total Income | xxx |
We will take an example to understand the calculation under section-80GG:
Example:
X earns Rs. 6 Lakhs annually. He pays Rs. 30,000 towards Life Insurance Premium eligible under section-80C. He stays in a rented premises and is not in receipt of house rent allowance. The annual rent paid by X is Rs. 1, 50,000.
In this example, Adjusted Total Income of X will be Rs. 5, 70,000 [6, 00,000 – 30,000]. X will be allowed deduction for rent paid u/s 80GG as least of the following:-
(a) Rs. 5,000 * 12 = Rs. 60,000
(b) Rent paid – 10% of adjusted total income:- 1,50,000 – 10% of 5,70,000 = Rs. 93,000
(c) 25% of adjusted total income:- 5,70,000* 25% = Rs. 1,42,500
