Section 80GG of the Income Tax Law establishes deductions related to the rental of housing based on certain conditions. Some of these involve being an individual or a Hindu Undivided Family (HUF), being self-employed or salaried, etc.
One of the most important tax deductions available to us is the rent on the house. This is covered by Section 80GG of the Income Tax Law. This is especially helpful for employees who do not receive a rental housing allowance (HRA) from their employers.
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Deductions under Section 80GG
In order for you to qualify for deductions related to the rental of the dwelling under Section 80GG, the following conditions must be met:
- Must be an individual or a United Hindu Family (HUF). A business cannot claim house rental deductions.
- It is necessary to be self-employed or salaried.
- You should not receive HRA benefits on your wages.
- You must complete and submit Form 10BA to declare that you are not claiming the Self-Occupied Property benefit in a home elsewhere or in the same place where you are employed.
- If your rent paid exceeds Rs. 1 lakh per year, you need to present the PAN card of the owner of the house in which you live for rent.
- You can claim rent even if the house you are renting is semi-furnished or fully furnished.
In this section, you may claim the lesser of the following applicable amounts:
- Rs. 60,000 annually (Rs. 5,000 monthly)
- The amount is taken that is the same as the total rent paid minus 10% of the total income
- 25% of the annual salary
Exceptions under Section 80GG
- You cannot claim a home rent deduction if he owns a home where he is employed or operates a business.
- You cannot claim a home rent deduction if he is claiming benefits for owning a home elsewhere as self-occupied property. If he lives in one city and has a house in another city/town, it will be considered rented.
If he lives with his parents, there is an interesting way to take advantage of Section 80GG benefits. He can enter into a rental agreement with his parents and pay a specified amount, at least Rs. 60,000 - as rent to your parents. However, your parents will have to show that amount as income on their tax return.
With today's real estate rates, it is quite impossible for the minimum amount to be anything other than the limit of Rs. 60,000 allowed under Section 80GG. And if he is paying rent less than Rs. 5,000 per month, it is very likely that he is in a smaller city and his income is commensurately low and therefore completely exempt from paying income tax.
What is Form 10BA
Form 10BA is a declaration which has to be filed by an individua for claiming deduction under Section 80GG for rent paid on rental property.
How to get Form 10BA?
Form 10BA directly from the HR department of their organization or can be downloaded online from the official website of the Income Tax department.
How to correctly fill out Form 10BA
If you are willing to receive the benefits under Section 80GG, you will need to fill out Form 10BA. The instructions to do this is given below:
- Your name and PAN details
- Full address
- Pay mode
- Indicate the duration of the residence in months
- Rent amount
- Address of the property owner
- Statement that neither you nor any member of your family owns any other residential property.
- Data from the PAN of the owner of the rented property.
How to file Form 10BA online
To file Form 10BA online:
- Log in to the income tax website.
- Go to 'e-File' > 'Income Tax Forms.'
- Select Form 10BA for the relevant Assessment Year and click to Continue.
- Click on House Property Details, enter details like rented property address, landlord's info, and rent paid and click to Save.
- Save the information and make the declaration.
- E-verify the form using the chosen method.
- Form 10BA is filed and verified successfully.
How deduction under Section 80GG can be claimed?
Deduction under Section 80GG can be claimed :
- If Individuals are paying rent for the property they currently reside in.
- Individuals where they work must not own any property in the same city or location .
When deduction under Section 80GG cannot be claimed?
If Individuals own property within the same city but live in a rented property, they are not eligible for Section 80GG deduction.
You may also like the attached file as an Income Tax Preparation Excel Based Software All in One for the Government and Non-Government Employees for the Financial Year 2023-24 and Assessment Year 2024-25
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