Section 80GG, a friend for Tenants!

Sujan Afi S

Introduction

Are you living in a rental property and not receive any house rent allowance? Then this blog is going to be very important for you as in this blog we are going to discuss about tax benefits under the Income Tax Act Section 80GG for the people who are paying house rent and have not receiving any house rent allowance.

What is Section 80GG?

Section 80GG provides tax deduction offer for the people who do not receive any house rent allowance and live in a rental property, under Chapter VI-A of the Income Tax Act, 1961. 

Eligibility for claiming tax deduction under Section 80GG

The eligibility for claiming tax deduction under Section 80GG for an individual are mentioned below:

  • You must live in a rented house or apartment (or the like) for ensuring the eligibility of tax benefits under Section 80GG.
  • Self-employed, salaried individuals, and Hindu Undivided Families (HUFs) can claim tax deductions under Section 80GG but no companies are allowed to claim deduction under this section.
  • HRA (House rent allowance) should not be included within the salary package.
  • If you stay in a rented house but own a property then you cannot take the advantages of self-occupied property. Instead of self-occupying the property you need to show the property as deemed to be let-out.
  • The individual or his spouse or minor child of the family or HUF of which the person is a member should not enjoy the accommodation facility from the side of employing authority.
  • You are not allowed to use the rented property for any business work or other income generating purpose. The rented house or room or flat should be used for residential purpose only to claim tax deduction under Section 80GG.
  • In case you own a self-occupied property even in other city then you are not eligible to claim tax deduction under Section 80 GG.
  • If you cannot show your income then you are not eligible to take the advantage of Section 80GG even if you are staying in a rented house and paying the rent.
  • You need to submit a duly filled Form 10BA to the government authority for claiming tax deduction under Section 80GG.
  • In case the yearly gross rental amount exceeds Rs 1 lakh then you must submit the copy of PAN card of the home owner to claim tax deduction under Section 80GG. 
  • No matter whether the rented house is furnished or unfurnished or semi-furnished but you can claim tax deduction under Section 80GG if all other necessary requirements are fulfilled.

How to claim tax deduction under Section 80GG?

For claiming the tax deduction under Section 80GG you need to submit a duly filled form 10BA via online platform. 

Calculation of Deduction amount under Section 80GG

The amount of tax deduction under Section 80GG is mainly based on Tax Rule 2A. A tax payer who is residing in a rented house can claim three kinds of deduction under Section 80GG, such as –

  1. 25% of the total annual income (excluding various long term and short term capital gains).
  2. Total annual rented amount that you need to pay to the owner minus 10% of your total annual income.
  3. Rs 5,000 per month or a total of Rs 60,000 in a year.

Information you need to provide while filling Form 10BA

For claiming tax deduction, you need to submit a duly filled Form 10BA and in the process of filling the Form 10BA you are required to provide a number of information, such as –

  • Name, address, and contact details of the tenant,
  • Name and details of the address of property owner,
  • Amount of rent and mode of payment,
  • Tenure of residency in months,
  • PAN card details of the property owner in case the gross yearly amount exceeds Rs 1,00,000.
  • Declaration statement that the tenant or his spouse or minor child of the family does not own any other residential property.

Also read: Employees without HRA can get tax deduction on rent they paid

Conclusion

The Section 80GG is very helpful for those who are residing in rental property and do not get any home rent allowance. By providing the advantages of tax deduction it reduces the financial burden over tenant. Thus, you can claim this advantage if you are eligible for that.

I hope that I have been successful in giving an idea of the deduction that you can claim in your home rent via Section 80GG. Nevertheless, feel free to contact us via our mail address info@roodland.com. Your query will be handled with proper care by our specialists. Roodland India ensures that you get the best service and do not make any mistake in taking any decisions related to real estates. Alright, this is all for today. We will meet soon with a new topic. Till then please share the article in social media platforms if you find it useful.

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