Section 80GG Deduction-Get Tax Benefit on rent paid if not getting HRA ..

All salaried are very much familiar with HRA and how to get the benefit of the rent they pay. However, what about those who do not get HRA in their salary or for self employed? Will they still get rent benefit? The answer to both the questions is Section 80GG of Income Tax.

In computing total income , an assesse is allowed a deduction in respect of expenditure towards payment of rent for any furnished or unfurnished accommodation occupied by him for the purpose of his own residence provided the following conditions are satisfied ;

1-This section is only applicable to Individual or HUF (self employed / salaried employee ) who is not in receipt of House Rent Allowance at any time during the previous year .

2- Tax Payer himself or spouse/Minor Child/HUF of which he is a member should not own any accommodation at a place where he is doing a job or business.

3-If Tax Payer owns house at a place other than the place noted above, then the concession in respect of self occupied property is not claimed by him [Under Section 23 (2) (a) or 23 (4) (a)].

4- Tax Payer has to file a declaration in Form No. 10BA regarding the expenditure incurred by him towards the payment of rent.

Amount of deduction under Sec. 80GG -

If the above four conditions are satisfied, the amount deductible under Section 80GG is LEAST OF THE FOLLOWING.

• Rs.2, 000 per month;
• 25% of total income of taxpayer for the year (Total Income is calculated after excluding long-term capital gain, short-term capital gain under section 111A, and income referred to in section 115A or 115D, Amount deductible under Sec.80C to 80U (except Section 80GG)
• Rent Paid less 10% of total income (Rent Paid-10% of Total Income).

Example :-

Mr. Ram's total income (calculated as per above formula) is Rs.5,00,000. He pays an annual rent of Rs.2,00,000. Then least of the below will be applicable for deduction under Sec. 80GG.

• Rs.24, 000 per year.
• Rent Paid-10% of Total Income=Rs. 2,00,000-Rs.50,000=Rs.1,50,000.
• 25% of Total Income i.e Rs.1,25,000.

So least of the above will be Rs.24, 000, which one can claim under Section 80GG for that particular FY.

I hope I have covered all necessary points related to information , if you have any suggestion or doubt please let me know in comments below .