Introduction-
Deduction under section 80GG is allowed for Rent Paid, If you are paying house rent and House Rent Allowance (HRA) is not a part of salary, even then you can save your tax u/s 80GG.
Eligibility-
- Deduction is available to an Individual or HUF.
- The taxpayer is either self-employed or salaried person (but does not receive any benefit of deduction under section 10 (13A) for House Rent Allowance.
- The taxpayer himself or spouse or minor child or HUF of which he is a member should not own any property at the place where he is employed or carries any business or profession.
Amount of deduction-
It shall be least of the following: -
- 5,000/- per month
- 25% of the total income*
- Actual Rent paid less 10% of the adjusted total income*
* Adjusted total Income means: - Total Income of the taxpayer for the year before claiming any deduction u/s 80GG means excluding -
- Long Term Capital Gain
- Short Term Capital Gain under 111A or section 115D
- Deduction under section 80C to 80U
Example 1-
Mr. X has total income of Rs. 3,60,000 (after all deductions), he pays an annual rent of Rs. 1,80,000. What will be the deduction under section 80GG?
Answer-
The deduction shall be the least of the following -
- 5,000 per month i.e. Rs. 60,000 per annum
- 25% of adjusted total income i.e. Rs. 90,000
- Rent paid i.e. Rs. 1,80,000 minus 10% of total income i.e. Rs. 36,000 = Rs. 1,44,000
Deduction under section 80GG i.e. Rs. 60,000 also filing Form 10BA to avail this deduction.
Documents Required to claim deduction-
- An employee is required to furnish related documents i.e. Rent agreement and Rent receipts.
- If annual rent exceeds Rs. 1 lakh during the year, you have to furnish PAN of landlord.
- You have compulsory to file declaration in Form 10BA to avail the said deduction.
Specimen format of Form 10BA-
FORM NO. 10BA [See rule 11B]
Declaration to be filed by the assessee claiming deduction under section 80GG
I/We ……………………………………………………………………………(Name of the assessee with permanent account number) do hereby certify that during the previous year…………………..I/we had occupied the premise…………………………………………………………………….. (full address of the premise) for the purpose of my/our own residence for a period of months and have paid Rs……………………………………….in cash/through crossed cheque, bank draft towards payment of rent to Shri/Ms/M/s……………………………………………………………………………………….(Name and complete address of the landlord).
It is further certified that no other residential accommodation is owned by-
(a) me/my spouse/my minor child/our family (in case the assessee is HUF), at where I/we ordinarily reside/perform duties of office or employment or carry on business or profession, or
(b) me/us at any other place, being accommodation in my occupation, the value of which is to be determined u/s 23(2)(a)(i) or u/s 23(2)(b).
How to E-file form 10BA
To claim deduction under Section 80GG, you have to file a declaration in Form No. 10BA. You can prepare and file Form 10BA on the Income Tax E-Filing website after following the steps are as under -
- Login to income tax e-filing website.
- Click on ‘Prepare and Submit Online Form (other than ITR)’ under Tab ‘e-file’.
- Select Form 10BA from the dropdown list and proceed to fill in the form and submit.