80GG – HRA Deduction

Section 80GG of the Income Tax Act, 1961 provides relief to the employees who do not receive house rent allowance (HRA) from their employer but paying rent. The deduction was introduced to provide relief to the individuals and reducing their overall tax liability.

If an individual lives in one city and has a house in another city or place, then he also can claim the deduction as it will be considered as rented out.

It should be noted that an individual can’t claim both HRA and deduction under section 80GG.

Eligibility to claim section 80GG

• Only individuals and Hindu undivided families (HUF)
• Employee or self-employed person
• Have not received HRA at any time during FY
• Doesn’t own any residential accommodation at the residing place
• Filing of Form 10BA containing the details of payment of rent.
• Copy of the PAN card of the landlord, if yearly rent exceeds Rs. 1 Lakh.

Deduction under section 80GG

The deduction under section 80GG shall be the least of the following:

• Total yearly rent paid minus 10% of adjusted GTI.
• Rs 60,000 per year. i.e., Rs 5,000 per month).
• 25% of the adjusted gross total income.

Note: Adjusted gross total income means gross total income after deducting the following if any:

• Long term capital gain (LTCG)
• STCG u/s 111A
• All deductions under section 80C to 80U except deduction under section 80GG
• Incomes taxed at a special rate of NRIs and foreign companies, i.e., incomes u/s 115A, 115AB, 115AC or 115AD.

Form 10BA to claim deduction 80GG

Filing Form 10BA is one of the compulsory condition claim deduction under section 80G. It includes:

• Name and PAN of the assessee
• Name and address of the property owner (PAN number if rent amount exceeds Rs. 1 lakh in any financial year)
• Rental amount
• Tenure of residency in months
• Mode of payment of rent
• Declaration of non-owning any residential property by the assessee, his/her spouse or minor child.

How to file Form 10BA?

Form 10BA declaration can be easily filed online at the Income-tax portal. Here are the simple steps you need to follow to file Form 10BA:

Step 1: Log in at the Income tax portal by using user ID (PAN card) and password.

Step 2:Go to the “e-file” tab and click on “Income tax forms.” Once you click on “File Income tax Forms”, now click on the “Others(Source of Income not relevant)” and select form 10BA – File now.

Step 3:The declaration will open. Here, select the Assessment year and click on continue.

Step 4: Fill the required details, i.e., House property details and declaration and click on the preview to re-check and submit Form 10BA.

Claiming a deduction for paying rent to family members

Eligible persons residing with their parents can also claim deduction under section 80GG. However, for this, you need to fulfil the two conditions, i.e.,

• You must have a rental agreement with your parents
• The rental income shall be taxable in the parent’s income tax return.

Conclusion

Paying the house rent is a real burden for the employees, especially those living in the metro cities. If you are receiving HRA, then you don’t need to worry. On the other hand, those who are not receiving HRA can claim a deduction of up to Rs. 60,000 under section 80GG to reduce their tax liability.