Sailent features of Section 80GG

Section 80GG of Income-tax Act 1961 as amended by Finance Act 2016

The Simple reading of this section gives the following understanding that Assessee, not falling within clause (13A) of section 10, there shall be deducted any expenditure incurred in respect of any furnished or unfurnished accommodation occupied by him for the purposes of his own residence 

1. Excess of ten percent of his total income towards payment of rent
2. Five Thousand rupees per month
3. Twenty-five percent of his total income for the year

Whichever is Less:

Provided that nothing in this section shall apply to an assessee in any case where any residential accommodation is -

(i) owned by the assessee or by his spouse or minor child or, where such assessee is a member of a Hindu undivided family, by such family at the place where he ordinarily resides or performs duties of his office or employment or carries on his business or profession; or

(ii) owned by the assessee at any other place, being accommodation in the occupation of the assessee, the value of which is to be determined under clause (a) of sub-section (2) or, as the case may be, clause (a) of sub-section (4) of section 23.

Explanation.-In this section, the expressions "ten percent of his total income" and "twenty-five percent of his total income" shall mean ten percent or twenty-five percent, as the case may be, of the assessee's total income before allowing a deduction for any expenditure under this section.

1. Assessee not owning the house

Assessee can deduct under this on the basis of aforesaid calculation

2. If Assessee Owning the House (In his own Name or in the name of spouse, minor child or in the name of member of HUF)

A. In the same city

Not eligible to get deduction under this section

B. In the different city

Eligible to get deduction under this section but Assessee can not show the same house under house property as Self Occupied even if it is Vacant. Assessee should have to show as a Deemed to Let out.

3. Incurred by the Assessee

If the assessee is a Salaried employee and gets the HRA from the employer that it has to be deducted from the rent paid to the landlord of Accommodation.

For Example Like if Assessee paid Rs.10000/- per month to the landlord and get the HRA of Rs.3000/-per month from the Employer than total rent incurred by the assessee is Rs, 7000/- and assessee can get a deduction of Rs. 7000/- under this section.

4. Form No. 10BA as per Rule 11B

A most important point which generally some tax consultant and TRP are ignoring is that they are not filling the form 10BA prescribed under this section. There may be a possibility that in future the Income-tax officer can reject the deduction claimed under this section.