Section 80GG: Deduction For Rent Amount Paid

Rental housing can be a real burden especially in big cities where finding a rental house is difficult. As the demand for rental housing is high, rent also increases with each passing day. However, if you are a paid employee and receive an HRA or have your own home in the city, you may need to not worry. However, for those who have to rent a house but do not receive the HRA (Leasing Grant), it could hurt their monthly income. However, there is a provision in the Income Tax Act, which can be your savior. According to the Income Tax Act, 1961, section 80GG allows you to claim deductions from the amount of rent you pay each year.

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1. What is Section 80GG as per Income Tax Act?

80GG is a section of the Indian Income Tax Act, where a person can apply for a deduction from rented or unoccupied house. The house should be used as their living quarters.

With deductions , here we mean the amount you can deduct from your total annual income to earn taxable income.

2. Conditions to claim deduction under Section 80GG?

There are certain conditions that you must meet to qualify for a deduction under Section 80GG. Here are the conditions -

  • A person can apply for seizure under this section if he or she is self-employed or a non-leading HRA person in his / her CTC.
  • Companies cannot apply for a deduction under this category at their own rental cost.
  • You as an individual are entitled to this arrest.
  • If you earn, you do not have to receive any HRA or RFA benefits and you do not have the right to receive them, in order to receive section 80GG benefits.
  • You can apply for a deduction under this section from any type of unoccupied, furnished or lightly furnished residential building where you live as a tenant.
  • If a taxpayer receives any of the same deductions for that year of assessment, he or she will not be able to receive a deduction under this section of 80GG.

You or your spouse or minor child or member of the HUF - you do not own any accommodation in your current area, do office work, or hire or do business or occupation. If you own your own accommodation no benefits under section 80GG will be allowed.

Apart from these assets, any other property you own will be called a major asset, such as land, property, shares, patents, trademarks, jewelry, etc.

3. How to claim deduction under Section 80GG?

To complete a valid claim under section 80GG you need to submit Form 10BA online. In accordance with what you need to look for in the Income Tax file.

4. How to file Form 10BA?

Form 10BA is a declaration required for submission when seeking benefits under section 80GG. It is a declaration that you have rented a house on time and that you have no other place to live. As Form 10BA is required to be submitted when applying for a deduction under section 80GG . Let's understand the step-by-step process of submitting this form online.

  • Login to https://incometaxindiaefiling.gov.in/ with your User ID, password and captcha.
  • Now click on the tab called 'e-File' and select 'Income Tax Forms'.
  • The screen will appear below. First downstairs select Form 10BA.
  • Now select the Test Year you must complete Form 10BA and complete the shipping mode by "Prepare and submit online."
  • Now if you click continue, the BA Form 10 screen will appear below. You can read the File 10BA file management guidelines provided on the first blue tab and enter the relevant details by clicking on the other green tabs and submit.

5. What will be the quantum of deduction under section 80GG?

Deductions may be less than one-third of the following -

  • Rs. 5000 per month or per year Rs. 60000
  • 25% of total adjusted per capita income
  • Amount earned after deducting 10% of adjusted income from the amount of rent paid during the financial year.
  • Adjusted revenue amount means Total revenue after deductions:
    1. LTCG if available, included in total revenue
    2. STCG u / s 111A
    3. All catches u / s 80C up to 80U without being caught under this category
    4. Revenue from NRI and foreign companies, etc. taxable at a special tax rate such as income s / s 115A, 115AB, 115AC or 115AD.

6. Examples

To understand the amount of deductions you may qualify for in the best way, here is an example.

Suppose your friend Prachi earns Rs. 5 lakh p.a. She lives in Mumbai in a rented house and pays Rs.15000 a month rent. Therefore, his total annual rent is Rs. 180000. Now, in terms of the above, three chances are -

  • Rs. 60000 annually
  • 25% of 500000 = Rs.125000
  • 180000- (10% of 500000) = Rs.130000

Therefore, at least of these three amounts are Rs. 60000. Your friend can therefore claim a deduction from Rs. 60000 per annum on the total rent he pays.

7. Who can claim Deductions under this section?

A person who lives in a rented house and who must be a person who does not receive any HRA from his or her employer can receive that money.

Different

There are some cases where you will not be able to apply for an injunction even if you meet the above criteria -

  • You are the owner of a house in the town or town where you are employed or doing your business (self-employment).
  • For those who live with their parents in their parents' home, they cannot be deducted from this category as they do not pay rent.

Trick Therefore, you live with your parents and any other relative where you do not pay any rent but want to get a deduction under 80GG. If so, you need to pay the rent to your parents or relative at least on paper which means you need to have rent receipts to get a small deduction. However, the downside is that your parents should show their rent as their income from their tax rent.

8. What is the information required for claiming deduction under section 80GG?

To To claim a deduction under section 80GG, you need to enter the required information.

  • Your name
  • The address of the place where you live for rent. You must provide the full address and postal code as well
  • Your PAN details
  • Duration of stay in a rented place
  • Rent and mode (cash, bank deposit etc.) for payment
  • Address and homeowner's name. (which is the landlord).
  • (No such information is required when completing Form-10BA online at an IT site)
  • Declaration that you are not the owner of the residence in your name or the name of your spouse or even the name of your minor child or HUF of which you are a member.

9. Summary

Under Section 80GG of the Indian Income Tax Act 1961, any person (no company) may require a deduction from the amount of rent he or she pays for his or her accommodation. In order to request a deduction a person must work for himself or herself. Also, in paid work, each person should not be entitled to any HRA (for that year of assessment). Less than Rs. 60000 per annum or 25% of gross annual revenue adjusted or deducted 10% of gross adjusted income from annual rental income may be claimed as a deduction. The examiner must not own any accommodation on his or her behalf and not even on family members as the name of the spouse or minor child or HUF is a member, otherwise, he or she may not be entitled to any deductions under this section. .

Frequently Asked Questions

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What is Adjusted Total Income?

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The adjusted amount of income mentioned above may be defined as the auditor's annual income that does not include any long-term capital gains or large short-term gains in it (s / s 111A) and any other income under section 115A, 115AB, 115AC or 115AD. This revenue is after deducting any deductions from 80C to 80U and apparently before deducting 80GG.


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What is HRA?

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HRA or house rent allowance is a benefit that many leading people receive from their employers (especially those who do government work). This money is for rental accommodation in the city where you are employed and you do not have your own house. You may want to be exempted from the HRA value under section 10 of the Income Tax Act under certain conditions.


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What is Financial Year?

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It is a 12-month period considered for accounting and revenue accounting and tax purposes. Here, in India, the financial year starts on the 1st of April and ends on the 31st of March next year.


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What is Assessment Year?

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The year following the financial year, in which you have to pay tax or taxes will be calculated to be known as the Audit year. For example, If the financial year runs from 1 April 2019 to 31 March 2020 (FY 2019-20). The year of inspection will be 1 April 2020 to 31 March 2021 (AY 2020-21).


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Who is an Assessee?

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A person who completes his or her tax return for testing in the year of assessment is known as an inspector. Here a person who is applying for a deduction under section 80GG, must complete a tax tax return for tax purposes and will be considered an inspector.


CEO Krishna Gopal

Krishna Gopal Varshney is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Myitronline.com. Myitronline is amongst the top emerging startups of Asia and authorized ERI by the Income Tax Department. A dedicated and tireless Expert Service Provider for the clients seeking tax filing assistance and all other essential requirements associated with Business/Professional establishment. Connect to us and let us give the Best Support to make you a Success. ”

Krishna Gopal Varshney
Co-founder & CEO