Deduction in respect of rent paid Section 80GG

1. Eligible assessee: Assessee, who is not in receipt of HRA qualifying for exemption under section 10(13A) from employer and who pays rent for an accommodation occupied by him for residential purposes

Analysis: (A) if an assessee receives HRA from his employer then he is not eligible to claim the benefit of this section. This is beneficial to those assessees whose

• Salary structure has no part of HRA;
• Self-employed individuals who are paying rent for their residence.

     

 2. Conditions: The following conditions have to be satisfied for claiming deduction under section 80GG –

• The assessee should not be receiving any house rent allowance exempt under section 10(13A).

• The expenditure incurred by him on rent of any furnished or Unfurnished accommodation should exceed 10% of his total income (excluding long-term capital gains, short-term capital gains under section 111A, and Income under Section 115A or 115D and deductions under 80C to 80U. except section 80GG).

• The accommodation should be occupied by the assessee for the purposes of his own residence.

• If the assessee owns any accommodation at any place other than that referred to above, such accommodation should not be in the occupation of the assessee and its annual value is not required to be determined under section 23(2)(a) or section 23(4)(a).

• The assessee should file a declaration in the form 10 BA, confirming the details of rent paid and fulfillment of other conditions, with the return of income. Form 10 BA should be Filled before the filing of income tax return.

   

 3.  Quantum of deduction: The deduction admissible will be the least of the following:

1. Actual rent paid minus 10% of the total income of the assessee before allowing the deduction, or
2. 25% of such total income (excluding long-term capital gains, short-term capital gains under section 111A and Income under Section 115A or 115D and deductions under80C to 80U. but before making any deduction under this section), or
3. The amount calculated at ~ 5,000 p.m.

Mr. Ramesh, a businessman, whose total income (before allowing deduction under section BOGG) for A. Y.2021 -22 is (4, 60,000, paid house rent at (12,000 p.m. in respect of residential accommodation occupied by him at Kolkata.

The deduction under section 80GG will be computed as follows:

(i) Actual rent paid less 10% of total income

144 000 -(10% x 4, 60, 000) =  98 000 (A)

,

(ii) 25% of total income

25%x4, 60,000 = 1,15,000 (B)

(iii)Amount calculated at  5,000 p.m

(5000×12) 60,000 (C)

Deduction allowable [least of (i), (ii) and (iii)] = 60,000

Frequently Asked Questions (FAQ)

1. Who can claim this Deduction of section 80GG?

                Only individuals who are self-employed or HRA is not forming part of the salary structure.

2. When Will File FORM 10BA?

                  Form 10 BA declarations should be file before filing an Income tax return then only deduction of section 80 GG will be allowable.

3. Can an assessee claim HRA and section 80 GG benefit simultaneously?

                 No, if you are claiming HRA then you cannot claim deduction under section 80GG.