CA Sandeep Kanoi

CA Sandeep KanoiDeductions is respect of rents paid : Under Section 80GG, an Individual can claim deduction for the rent paid even if he don’t get HRA. Not many people are aware of this deduction.

Section 80GG allows the  Individuals to a deduction in respect of house rent paid by him for his own residence. Such deduction is permissible subject to the following conditions :-

(a)  the Individual has not been in receipt of any House Rent Allowance from his employer specifically granted to him which qualifies for exemption under section 10(13A) of the Act;

(b)  the Individual files the declaration in Form No. 10BA.  

(c)  The employee does not own:

 (i)  any residential accommodation himself or by his spouse or minor child or where such Individual  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 carries on his business or profession; or

(ii)  at any other place, any residential accommodation being accommodation in the occupation of the Individual, the value of which is to be determined under Section 23(2)(a) or Section 23(4)(a) as the case may be.

(d)  He will be entitled to a deduction in respect of house rent paid by him in excess of 10% of his total income, subject to a ceiling of 25% thereof or Rs. 2,000/- per month (Rs. 5000/- Proposed wef F.Y. 2016-17), whichever is less. The total income for working out these percentages will be computed before making any deduction under section 80GG. In other word eligibility will be least amount of the following :-

1) Rent paid minus 10 percent the adjusted total income.
2) Rs 2,000 per month (Rs. 5000/- Proposed wef F.Y. 2016-17).
3) 25 percent of the adjusted total income.
The deduction will also not be available to an assessee if any residential accommodation is owned by the assessee at any other place, which he is occupying, and the concessions in respect of self-occupied house are claimed by him for that property. In such a case, no deduction will be allowed in respect of the rent paid, even if the  person does not own any residential accommodation at the place where he ordinarily resides.House for rent
 What is the adjusted total income under section 80GG?

The adjusted total income means :-

Gross Total Income

Less

Long Term Capital Gain,

Short Term Capital Gain  of 10% category,

Deductions under sections 80C to 80U except section 80GG and income of foreign company.

Conclusion-Limit under Sec. 80GG has not kept pace with the limits under Sec. 10(13A) obviously because the limit under Sec. 10(13A) could be subject matter of revision by notification, while the limit under Sec. 80GG is stipulated in the statute itself so that an amendment to law would be required for enhancing the limit.

Download Format of  FORM NO. 10BA

Extract of section 80GG

[Deductions in respect of rents paid.

80GG. In computing the total income of an assessee, not being an assessee having any income falling within clause (13A) of section 10, there shall be deducted any expenditure incurred by him in excess of ten per cent of his total income towards payment of rent (by whatever name called) in respect of any furnished or unfurnished accommodation occupied by him for the purposes of his own residence, to the extent to which such excess expenditure does not exceed two thousand rupees per month or twenty-five per cent of his total income for the year, whichever is less, and subject to such other conditions or limitations as may be prescribed, having regard to the area or place in which such accommodation is situated and other relevant considerations :

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 per cent of his total income” and “twenty-five per cent of his total income” shall mean ten per cent or twenty-five per cent, as the case may be, of the assessee’s total income before allowing deduction for any expenditure under this section.]

Image courtesy of iosphere at FreeDigitalPhotos.net

(Republished with Amendments))

More Under Income Tax

Posted Under

Category : Income Tax (20768)
Type : Articles (10544) Featured (3601)

Search Posts by Date

August 2016
M T W T F S S
« Jul    
1234567
891011121314
15161718192021
22232425262728
293031