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

 

Deduction under section 80GG for Rent Paid

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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.
  • 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.
 
See the related post: Deductions under Chapter VIA



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