House rent paid by a salaried person who is getting House Rent Allowance (HRA)

Where expenditure is incurred by the assessee towards payment of house rent, he is allowed to get a deduction from his total income.

Least of the following is exempt from tax u/s 10(13A) read with Rule 2A:

(i) Actual amount of HRA received by the assesse in respect of the period during which rental accommodation was occupied by the assesse during the relevant financial year.

(ii) Excess of rent paid over 10% of salary.

(iii) 50% of salary where the residential house is situated in Mumbai, Kolkata, Delhi or Chennai or 40% of salary where the residential house is situated at any other place.

Note: (i) Meaning of salary – Salary includes DA, if terms of employment so provides, but excludes all other allowances and perquisites. (ii) Salary in respect of the period during which rental accommodation was occupied by the assesse during the relevant financial year shall be considered.

House rent paid by a salaried person not getting any House Rent Allowance or self-employed person.

An individual can get a deduction from his taxable income under section 80GG of the Income Tax Act, 1961.

The least of the following amounts is eligible for deduction:

a. Rent paid minus 10% of total income (i.e. rent paid in excess of 10% of his total income)

b. 5,000/- per month (Rs. 2,000/- per month upto assessment year 2016-2017)

c. 25% of his total income

Meaning of total income for the purpose of section 80GG

Total income does not include the followings:

i) Long term capital gain & short term capital gain under section 111A

ii) Income referred to in section 115A or 115D

iii) Amount deductible under section 80CC to 80U except 80GG

Eligibility to claim deduction under section 80GG

The assesse has to satisfy following conditions to get the benefit of section 80GG:

i) The assesse or his spouse or his minor child or where he is a member of a HUF, such HUF does not own any residential accommodation at the place where the assesse ordinarily resides or performs duties of his office or employment or carries on his business or profession.

ii) Where the assesse owns a residential accommodation at any other place, such accommodation is not claimed as self occupied property under section 23(2)(a) or 23(4)(a) of the Income Tax Act, 1961.

iii) The assesse should file online declaration in Form 10BA.

How to file online declaration in Form 10BA?

Followings are the steps for filing of Form 10BA online onto the portal of www.incometaxindiaefiling.gov.in

  • Logging into your PAN A/C through www.incometaxindiaefiling.gov.in
  • Take mouse pointer on e-File tab
  • Click on Income Tax Forms from drop down menu
  • Select form name 10BA then select assessment year then select submission mode
  • Fill up the form
  • Preview & submit
  • submit

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