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Fincash » Tax Planning » Section 80GG

Section 80GG Deduction on Rent Paid

Updated on December 1, 2022 , 5843 views

Rented apartments are a popular option among bachelors as well as families. It provides much convenience financially and flexibility. You can avail rented house at every budget.

Section 80GG

Section 80GG of the income tax Act 1961 deals with a Deduction on rent paid toward both furnished and unfurnished houses. Let’s take a deeper look into this.

What is Section 80GG?

Section 80GG refers to a provision under the IT Act where you can claim a deduction on the rent you pay toward a residential accommodation.

Deduction under section 80GG means that the amount you can deduct from the gross Income of the year to derive the net Taxable Income on which income tax would be charged.

Usually, HRA is a part of an individual’s salary and one can claim deduction under HRA. However, if you don’t have HRA from your employer and you are making rent payment from out of your pocket, you can claim the Section 80GG deduction limit.

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Conditions Under Section 80GG

Mentioned below are the conditions to meet before availing the benefits under Section 80GG.

1. Salaried Individual

You must be a salaried individual in order to claim the benefit under this section. You should not be having the HRA provision in your CTC.

2. Companies/Firms

Companies or firms cannot claim this benefit under Section 80GG.

3. Property Type

Only residential properties on rent are eligible to avail the benefit under this section. The residential property could be both furnished or unfurnished.

4. Similar Deduction

If you are already receiving any similar deduction, you will not be eligible for this deduction.

5. Other Conditions

Note that if you or your spouse can claim this deduction only if you do not own any residential accommodation at the place of current residence. If you have any self-occupied house property, you will not be allowed to avail the benefit. Other property like Land, shares, patent, trademarks, jewellery will be considered Capital assets.

Claiming Deduction Under Section 80GG - Form 10BA

To can claim deduction under Section 80GG, you will have to fill Form 10BA online. Form 10BA is a declaration that is required for submission in order to claim benefits under this section. It is a declaration that you have taken a house on rent during the financial year and have no other residence place. You have to submit this form while filing for deduction under Section 80GG.

Here is how you can file Form 10BA:

  • Log in to the website of the Income Tax Department
  • Enter your User ID and Password
  • Click on the tax ‘E-File’
  • Select ‘Income Tax Forms’
  • Select Form 10BA
  • Select the Assessment year
  • Fill submission mode as ‘prepare and submit online’
  • Click on continue
  • Enter all relevant information

Quantum of Deduction Under Section 80GG

The amount of deduction will be based on any of the following three options:

  • Monthly rent of Rs. 5000 or annual rent of Rs. 60,000
  • 25% of the adjusted total income of a person
  • The amount which is derived after deducting 10% of the adjusted total income from the amount of total rent paid in the financial year

Adjusted total income refers to Gross total income after reducing the LTCG (if any). It also includes STCG under Section 111A, all other deductions under Section 80C. Other factors include the income of Non-Resident Individuals (NRI) and foreign companies who are taxed at a special Tax Rate of income under Section 115A, 115AB, 115AC or 115AD.

Important Details to File Under Section 80GG

Mentioned below are the important details to file while claiming deduction under Section 80GG:

  • Name
  • Renting Property Address
  • PAN Details
  • Tenure you have lived in the rented property
  • Amount of rent
  • Mode of Paying Rent
  • Name and Address of the property’s Landlord
  • Declaration that the property does not belong to your or your spouse or that of your minor child

Conclusion

Section 80GG is truly beneficial for individuals living on rent. You can save a lot of money, but make sure to file on time to enjoy complete benefits.

Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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