Section 80GG Deduction Under Income Tax Act

Section 80GG deduction on income tax can be claimed on the house rent that you pay for any furnished or unfurnished accommodation in case your employer doesn’t pay HRA.

Generally, you may have read about claiming a deduction/exemption in respect of house rent paid by salaried employee but do you know that non- salaried person/self-employed persons can also claim a deduction for the amount paid for house rent under income tax act/rules?

Section 80GG Deduction for Non-Salaried

As per section 80GG of the Income tax act non- salaried person as well as salaried persons not getting house rent allowance may claim deduction of house rent paid for furnished or unfurnished house for self-occupation.

Least of the following is eligible for deduction

1. Rent paid minus 10% of total income
2. 25% of total Income
3. Rs 5,000/- per month

Earlier the upper monetary limit of Rs 5000/- as per sr. no 3 was Rs 2000/- but Limit has been increased to Rs 5000/- w.e.f. assessment year 2017-18

“Total income” shall mean total income of the assesse before allowing deduction for any expenditure under this section.

The above deduction is not available to the assesse where a residential accommodation is

• owned by Individual assesse or his spouse or minor child or HUF at the place where he ordinarily resides or performs duties of his office or employment or carries on his business or profession; or
• owned by Individual assesse a self-occupied residential house property at any other place which have been valued at “Nil” under income from house property.

The above deduction is also available to salaried employees if they are not receiving House rent allowance from their employers’ subject to condition and limits given above. To claim this deduction from your employer you should furnish form 10BA duly filed along with requisite calculations. This deduction can be considered by the employer while calculating the amount of tax deduction at source (TDS) from employee’s salary.

Example:

Suppose Jindal a retired employee not getting HRA, earn a total Income of Rs 300000(after deductions) in financial year 2018-19 and paid House rent of Rs 7500 per month.for self-occupied house. Calculate deduction u/s 80GG.

Least of three will be the amount of deduction u/s 80GG

1. Rent paid in minus 10% of total income. [96000-(10% of 300000)] =66000
2. 25% of total Income=25% of 300000=75000
3. Rs 5000/- per month =Rs 60000/-

So, the deduction amount will be Rs 60000/- in this case.

Form Prescribed

As per rules 11B of the Income tax rules, deduction u/s 80GG in respect of any expenditure incurred by an assessee towards payment of rent for any furnished or un-furnished accommodation occupied by him for the purposes of his own residence shall be allowed subject to the condition that the assessee files the declaration in Form No. 10BA.

Format of 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 -………………/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

1. 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
2. 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).

Other Tax Articles:

1. Section 80C, 80CCC & 80CCD Deduction
2. Aadhaar Card Update Online
3. How to Calculate Income Tax
4. ITR 1 Form
5. Income Tax Act