Section 80GG of the Income Tax Act, 1961 provides tax benefits for individuals who do not receive house rent allowance (HRA) from their employer, but still incur expenses on rent for their accommodation.
The section allows for a deduction of the rent paid for the previous year, subject to certain conditions. The deduction allowed under Section 80GG is the least of the following:
- Rs. 5,000 per month
- 25% of the total income for the year, excluding long-term capital gains, but before allowing for any deductions under Section 80GG
- Actual rent paid less 10% of the total income for the year, excluding long-term capital gains, but before allowing for any deductions under Section 80GG
The conditions that need to be fulfilled to claim deduction under Section 80GG in India:
- Eligible Taxpayers: The taxpayer must be either a self-employed individual, a salaried individual, or a Hindu Undivided Family (HUF). However, businesses cannot claim this deduction.
- No Self-Occupied Property: If you own a residential property, and you're already claiming deductions for it under the applicable sections of the Income Tax Act as a self-occupied property, then you cannot claim a deduction under Section 80GG for the rent paid on another property, even if you do not receive HRA from your employer.
- No HRA Received: To claim a deduction under Section 80GG, you should not have received any House Rent Allowance (HRA) from your employer during the financial year for which you are claiming the deduction. Additionally, the HRA component should not be a part of your salary.
- No Residential Accommodation Owned: The taxpayer or their spouse or minor child should not own a residential property at the place where they reside or carry on business or profession.
- Form 10BA: You will be required to file Form 10BA with details of the payment of rent.
- PAN Card of Property Owner: If your rent amount exceeds Rs.1 lakh per annum, you will have to submit the PAN card of your property owner to claim the deduction.
- No Double Claim: To claim a deduction under Section 80GG, you should not have claimed the HRA at any time during the financial year. If you have changed jobs and received an HRA deduction from your previous employment in the financial year, you will be ineligible to claim a deduction under this section.
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