Section 80GG of Income Tax Act, 1961 (Deduction in respect of Rent Paid)

According to Section 80GG an individual can claim deduction of expenditure incurred in respect of furnished or unfurnished accommodation occupied by such individual for the purpose of his/her own residence to the extent as allowed by income tax department subject to such prescribed conditions or limitations.

Conditions:

1. Such individual does not receive House Rent Allowance (HRA) at any time during the year for which such individual is claiming deduction u/s 80GG.

2. Such residential accommodation is not owned by the assessee or by the spouse, or minor child, or where such assessee is a member of HUF then not owned by such HUF at the place where he ordinarily resides or performs office duties or causes his business or profession.

3. If you own any residential property at any place, for which your income from house property is calculated under applicable sections as a self-occupied property, no deduction u/s 80GG is allowed.

4. The assessee is required to file declaration in Form No. 10B.

Limitation:

Such individual can claim deduction under this section as per prescribed conditions

The maximum amount which can claim is Lower of the following.

1. 5,000 per Month

2. 25% of the Total Income*

3. Actual Rent less 10% of Total income*

*Total income means income excluding long term capital gains, short term capital gains u/s 111A and income u/s 115A or 115D and deduction u/s 80C to 80U. Also, income is before making a deduction u/s 80GG.

Important point

If such individual is living with his/her father and mother in their house, then such individual can claim the benefit of such section 80GG. However, such individual is required to make a proper rent agreement with parents to get such deduction and mother or father who owns such property, will have to declare such rent as income in their Income tax return.

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Company: Ankit Mahendra & Associates
Location: Lalitpur, Uttar Pradesh, IN
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I am qualified chartered accountant, engaged in practice and experience in Income Tax return filing, tax audit, Goods & Services Tax return filing, GST audit, various registration and incorporation etc. View Full Profile

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