Deduction u/s 80gg based query

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 March 2012 80GG: The agreement is in name of one person of the family but the rent(say about Rs.25000 per month) being quite high, 5 members from the family contribute the same. Now, can each of them take a deduction of Rs.2000 per month i.e. Rs.24000 annually or will the person under whose name agreement is can only take?

Querist : Anonymous

Querist : Anonymous (Querist)

24 March 2012 Any ideas on the above?

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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20 July 2024 Under Section 80GG of the Income Tax Act, deduction for rent paid can only be claimed by the individual who is actually paying the rent and is eligible under the conditions specified. Here’s how it applies to your scenario where multiple family members contribute towards paying the rent:

### Conditions to Claim Deduction under Section 80GG:

1. **No HRA Received**: The taxpayer (individual) should not receive House Rent Allowance (HRA) from their employer during the financial year for which deduction is claimed.

2. **No Ownership of Residential Property**: The taxpayer should not own a residential house in the place where they are employed or conduct their business/profession.

3. **Rent Paid**: The taxpayer should actually incur expenditure towards rent for residential accommodation occupied by them.

### Application to Your Scenario:

- **Agreement in One Person's Name**: If the rental agreement is in the name of one family member, technically only that family member can claim deduction under Section 80GG, provided they meet all the eligibility criteria.

- **Contribution by Multiple Family Members**: Even if multiple family members contribute towards paying the rent, only the person in whose name the agreement is can claim the deduction. The others cannot claim deduction under Section 80GG because the rent agreement and the payment obligation are legally in the name of only one person.

### Calculation of Deduction:

- The deduction under Section 80GG is limited to the least of the following amounts:
- Rent paid minus 10% of total income.
- 25% of total income.
- Rs. 5,000 per month.

- In your case, if the rent is Rs. 25,000 per month and it is being paid by one family member whose name is on the rental agreement, they can claim deduction up to Rs. 5,000 per month or Rs. 60,000 per year, subject to the conditions mentioned above.

### Conclusion:

Each family member contributing to the rent payment cannot individually claim deduction under Section 80GG unless their name is on the rental agreement. The deduction can only be claimed by the person whose name is on the rent agreement, provided they fulfill the eligibility criteria specified under Section 80GG. Therefore, in your scenario, only the family member whose name is on the rent agreement can claim the deduction, up to the specified limits.

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