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All About Deduction Under Section 80GG

Akash Dubey

| Updated: May 09, 2019 | Category: Income Tax, Startup

Deduction under section 80GG deals with deductions allowed under the Income Tax Act to taxpayers for paying house rent.

Generally, salaried employees receive House Rent Allowance as a part of their total salary.

In a few cases, employees are not entitled to HRA. In that case, if the employee is paying rent for accommodation, then he/she is entitled to avail deduction under Section 80GG for the amount of rent paid.

DEDUCTION UNDER SECTION 80 GG

What are the Eligibility Conditions for Availing 80 GG Deduction?

  • The assessee should be self-employed or a salaried employee who does not receive any HRA or have not received HRA at any time during the year
  • The place where the assessee resides or has an office or carries on any business or profession should not belong to him/her, her/his spouse, minor child or HUF.

What is the Maximum Amount of Deduction Under this Section?

The amount of eligible deduction is the lowest of the following:

  • (a) Rs 5,000 per month
  • (b) 25% of the Adjusted Total Income.
  • (c) Actual rent paid less 10% of Adjusted Total Income.

How to Calculate Adjusted Total Income for Section 80GG?

calculation of income under section 80 GG

Following items should be deducted from total income to calculate Adjusted Total Income:

  • Long term capital gains
  • Short term capital gains under 115A or 115D
  • Deduction under section 80C to 80U (this will not include deduction under 80GG)

Details required for Availing Deduction Under Section 80GG?

The following information needs to be furnished:

  • Name, address and PAN details of the assess
  • Residency tenure in the said premise (to be specified in months)
  • Mode and amount of rent paid
  • Name and address of the landlord.
  • PAN of the landlord is mandatory if the annual rental is more than 1 lakh for the assessment year
  • Declaration to the fact that no other residential accommodation is owned by the taxpayer himself or in the name of his/her Spouse / minor child or by the HUF in which he is a member.

Exceptions for Deduction Under Section 80 GG

There are exceptions to the deduction under section 80GG. These conditions are

  • One cannot claim house rent deduction if the location is also a place of business premises or place of their employment.
  • One cannot claim house rent deduction if they own a house at some other location. If a person lives in one city and owns a property in some other town, then the latter will be treated like a rented place.

Filling of Form 10BA

One needs to fill the form 10BA before filing for deduction under section 80 GG.

Contents of Form 10BA

The  Form contains the following details to be filed.

  • Name of the taxpayer
  • Pan Card details
  • Address of rented premises
  • Amount of rent paid
  • Details of Landlord (Name, address, pan card)

Where to find Form 10BA

One can find form 10BA on the Income Tax department Website under the e-File Tab.

Form 10 ba

Conclusion

If the required conditions are met and documents are submitted, then taxpayers can earn deductions under section 80GG.

Filing deduction under this section can reduce their tax liability to a certain amount.

However, furnishing any wrong information to avail these deductions will lead to revocation of deduction allowed with an additional penalty.

Therefore, one should follow the right procedure to claim 80GG deduction and take help of professionals.

Akash Dubey

Akash Dubey is a law graduate and an experienced legal content writer.He is proficient in writing legal and finance related content. His expertise in the skills of legal research is an aid to his strengths as a legal content writer.

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