Claim Deduction for Rent Paid Under Section 80GG

The Internal Revenue Service has given taxpayers with a number of Claim Deduction for Rent Paid Under Section 80GG of Income Tax Act by which they can reduce their taxable income and hence their tax payments.

However, there are various deductions that taxpayers are aware of and can take advantage of when filing their income tax return, such as section 80C, section 80CCD, section 80D, section 80G, and so on.

Section 80GG is one such deduction, which allows taxpayers to deduct the amount of rent they paid throughout the year. Salaried and self-employed individuals are also eligible for this deduction. 

Let us discuss how to claim the deduction, amount, procedure, and moreover, about conditions. 

What is 80GG Deduction? in Claim Deduction for Rent Paid Under Section 80GG.

HRA is usually inclusive in your pay and you can claim it as a deduction. If you do not receive HRA from your employer and pay rent for any furnished or unfurnished apartment that you use for your own dwelling, you can claim a deduction for the rent you pay under section 80GG.

Exceptions under Section 80GG under Claim Deduction for Rent Paid Under Section 80GG

An individual cannot claim a deduction for rent if the house is located near, he/she works or runs a business.

• If an individual is claiming the benefit of a house as self-occupied property in another place, he/she cannot claim a deduction on house rent.
• It will be considered rented out if an individual lives in one location and owns a home in another city.

If a person lives with his father and mother in their home, he/she may be eligible for a rent deduction.

In order to receive the rent deduction, he/she will need to enter into a leasing agreement with his or her parents. The mother and father who own the house should report the rent as income on their tax filings. If the son/daughter owns the residence jointly, they do not have permission to deduct the rent from their taxable income.

Condition for Claiming Deduction 

• Individual: These deductions are only available to individuals or HUFs.

• During the year, no HRA will be received: To be eligible for a deduction under section 80GG, the taxpayer must not receive any House Rent Allowance in his or her salary. If the taxpayer receives a home rent allowance (HRA) as part of his or her monthly compensation, he or she may be eligible for a deduction under section. However, he is not eligible for an additional deduction under section 80GG.

• Does not own any real estate: Another requirement for claiming a deduction is that the assessee, his spouse, or his minor kid do not own any residential property in the location where
  • He or she normally dwells,
  • Performs office duties, or 
  • Conducts business or profession. 
  • It’s worth noting that the taxpayer’s family cannot own residential property at the taxpayer’s usual residence.
• Deemed Let-out Property will be declared on all owned properties: The assessee should not possess any residential accommodation in his/her own occupation in any other location where the value of a Self-Occupied Property is to be established.

• Deduction Eligible Amount: The deduction under this clause will be based on the lowest of these.
  • 5,000 rupees per month
  • Long-term capital gains, short-term capital gains under section 111A,
  • Income under section 115A or 115D, and 

Actual rent minus 10% of gross income

How to Claim Deduction?

You’ll need to fill out Form 10BA with the information of your rent payment. Individual who wants to claim a deduction for rent paid on a rental property under section 80GG can submit Form 10BA.

Takeaway

Both residents and non-residents are subject to Section 80GG. Individuals, including non-residents, are able to Claim Deduction for Rent Paid under Section 80GG if they meet the criteria outlined above.

Further, if the taxpayer’s children and their parents jointly own the residence, they will not able to claim the rent deduction on their taxable income. 

Taxpayers cannot claim rent deduction until he fulfils all the criteria to claim for deduction.

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