Salaried employees are well aware of HRA and its benefit while filing IT returns. The section 80GG of the income tax offers a tax benefit for individuals and employees who do not receive rent allowance or those self-employed, they can get the exemption from the House Rent U/s 80GG Max Rs. 5000/-P.M. or Rs. 60,000/- P.A. from the financial year 2016-17
The Section 80GG of the Income Tax is only applicable for individuals who do not avail HRA. It also holds true for people who do not claim a deduction for their rent in any other sections of the Income Tax.
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However, to be eligible under the Section 80GG of the Income Tax, you required to meet the following conditions:
1. The Section 80GG is valid for individuals and HUF.
2. The person or the recipient should be a salaried or self-employed. However, the taxpayer should not receive any amount under HRA.
3. The taxpayer himself or spouse/minor child/HUF of which he/she is a member should not possess any property or accommodation at the location where they are working or carrying business activities.
4. If the individual or the taxpayer holds the possession of accommodation or property in another place than stated above, the tax deduction seeking concession is not valid [Under Section 23 (2) or 23 (4)(a)].1
5. It is important to submit Form No.10BA, stating details of the expenditure incurred by him/her towards house rent.
Individuals or employees who do not receive HRA as part of their salary have to seek exemption under Section 80GG. The deduction for the claim is possible by filing appropriate details during the Income Tax Return filing.
However, even at the sake of repeating, the following conditions must be met:
1. Exemption for HRA is available only to individuals or HUF
2. The assessee is self-employed or salaried and does not receive any benefit under Section 10(13A) for House Rent Allowance
3. The assessee or the spouse or the HUF should not possess any accommodation at the location of the work or carried his/her profession or business
4. If the assessee owns a property at any other place, he/she shall not claim benefit from it as self-occupied property
If you, as a taxpayer, are claiming deduction under Section 80GG of the Income Tax Act, you require furnishing declaration in Form 10BA that satisfies all the conditions mentioned above.
Limitations of Section 80 GG
The deduction allowed under Section 80GG for expenditure towards the rent paid is the least of the following:
1. INR 5,000 per month
2. Rent paid minus 10% of the total income
3. 25% of the total income earned by the taxpayer
The income of the taxpayer is the amount of total revenue received for a period.
Additionally, rent paid towards finished or semi-finished accommodation is also eligible for the claim under Section 80GG of the Income Tax.
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