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Deduction-under-section-80GG-for-Rent-Paid

 

Deduction under section 80GG for Rent Paid

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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-
  1. Deduction is available to an Individual or HUF.
  2. 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.
  3. 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: -

  1. 5,000/- per month
  2. 25% of the total income*
  3. 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 -
  1. Long Term Capital Gain
  2. Short Term Capital Gain under 111A or section 115D
  3. 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 -

  1. Login to income tax e-filing website.
  2. Click on ‘Prepare and Submit Online Form (other than ITR)’ under Tab ‘e-file’.
  3. Select Form 10BA from the dropdown list and proceed to fill in the form and submit.



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