Our WhatsApp number cannot be used for calls. This is a chat only number.
In a country like India, where rent inflation remains a major issue, especially in metro cities like Mumbai, tax benefits under Section 80GG come as a huge aid. This special provision is applicable to people not receiving a house rent allowance (HRA) and bearing the rental costs all by themselves.
Generally, to avail Section 80GG deduction for rent paid, both self-employed and salaried individuals must comply with certain conditions. All such details, including the maximum deduction limit, eligibility requirements, etc., are covered in this article.
Have a look!
Under Section 80GG, you can claim up to ₹ .60,000 per annum in case you have not received HRA at any time in a particular financial year. And, the quantum of the deduction is supposed to be the least of the following:
The total amount paid as rent (annually) minus 10% of the adjusted total income.
To understand it better, find the illustration on the 80GG deduction calculation below:
Let’s assume your annual income is ₹8 lakh, you are not currently receiving a house rent allowance from your employer, and you are paying ₹11,000 monthly as house rent. Then, according to the three conditions mentioned above, the applicable tax exemption amounts will be:
Since the lowest amount among these will be applicable as tax deduction under Section 80GG, you will be able to claim only ₹52,000. It is imperative to know that if the rent that you are paying exceeds ₹1 lakh per year, you will have to submit your landlord’s PAN CARD for that.
Now that you know about the maximum 80GG deduction limit and how it gets calculated, check the eligibility requirements as per Income Tax Act before going ahead with the claiming process.
As stated earlier, people receiving HRA as part of their salary package will not be able to claim deductions on income tax under Section 80GG. Apart from that, here are some conditions you are required to fulfil before filing form 10 BA for 80GG. Check them out!
Only the self-employed and salaried individuals will be able to claim tax exemptions under this section; companies cannot avail these benefits.
Note that there are also certain exceptions available under this particular section of the IT Act, enabling you to maximise its benefits. For instance, people living with their parents can claim the rent deduction benefits. All they have to do is make a rental agreement with their parents.
You should also know that the rental agreement should show that the annual rent expenditure is ₹60,000. You will be able to get more benefits if your parents are retired, senior citizens. However, the rent deduction benefit on taxable income is not applicable in the case of joint ownership.
Section 80GG of the Income Tax Act allows property owners to claim tax exemptions; however, they need to meet certain criteria to be eligible for that. For instance:
Oftentimes, people end up changing multiple employers in a particular financial year. In such cases, if they receive HRA even just for a month, they will not be able to claim tax deductions for the rent paid under Section 80GG.
With all this information, it should be easier for you to bring down your tax liability under Section 80GG. However, before going ahead, make sure to check all your payslips for that financial year, just to be sure!
Please try one more time!
Disclaimer: This information is added only for informative purposes and collected from different sources across the Internet. Digit Insurance is not promoting or recommending anything here. Please verify the information before making any decisions.
Continue with {{bikeCtrl.lastVisitedData.lastVisitedUrl.indexOf('DigitPaymentGateway/payments')
!== -1 ? 'payment completion': 'previous choice'}}
