Section 80GG is one of the lesser-known sections which can be used by taxpayers to lessen their tax burden by claiming tax exemption for rent paid (in case HRA is not part of salary). This section can be used to be either a salaried/pensioner or self-employed taxpayers.
Conditions for Claiming Tax benefit u/s 80GG for Rent Paid
You can guarantee charge conclusion on lease paid u/s 80GG at the season of recording government form just if the following conditions are fulfilled:
The finding is accessible just for people and HUFs
For a salaried individual to be qualified for tax break u/s 80GG, he ought not to get HRA from his boss.
Pensioners or Self utilized don't have any HRA thus they can exploit 80GG
No one in the family including companion, minor kids, self or HUF he is individual from should possess a house in the city you are utilized or conveying your business.
If you claim a house in the various city, you can't indicate it as self-involved. You need to consider it as regarded to let out – for example – you need to indicate rental pay whether it's really put on the lease.
Moreover, you have to fill structure no 10BA to guarantee tax cut u/s 80GG. This structure isn't to be submitted anyplace yet kept with you for records to show to I-T office if there should be an occurrence of examination.
Download Automated One by One Prepare Income Tax Form 16 Part B for the F.Y. 2018-19
Finding permitted u/s 80GG:
The House Rent finding is least of the underneath 3 numbers:
1. Rs. 5,000 every month [increased from Rs 2,000 to Rs 5,000 in Budget 2016]
2. 25% of yearly pay
3. (Rent Paid – 10% of Annual Income)
Expect that Amit has a yearly salary of Rs 5 Lakhs and he pays the lease of Rs 10,000 every month. Here is his tax cut for lease paid.
1. Rs. 5,000 every month – Rs 60,000
2. 25% of yearly pay – Rs 1,25,000
3. (Rent Paid – 10% of Annual Income) – Rs 70,000 (1,20,000 – 50,000)
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