What is section 80gg of income tax act?

What is Section 80GG of Income Tax Act?

Section 80GG of Income Tax refers to the deductions or some discount on the house rent that you are paying. The 80GG deduction is available under Chapter VI-A of the Income Tax Act of 1961. Salaried and self-employed people can claim reductions for housing rental payments under numerous provisions of the tax code, including Section 80GG and Section 10 (13A). The exemption limit of the rent should be Rs.60000 annually or 25% of the annual salary. It should be the amount of the total rent paid minus 10% of the total income of the individual. I have claimed deductions on my rent last month and it’s just way too simple.

Eligibility criteria for deduction claims on tax or rent:

1) The individuals who are working in any organisation or HUF (Hindu United Family) members who are paying rent or taxes are eligible to claim deductions.

2) Any organisation, company or business cannot claim the tax deductions on the rent.

3) Self-employed persons or salaried individuals are eligible to claim the deduction as per the Income Tax Act Section 80GG.

4) You have to submit form 10 BA by filling in all the essential information to the respective government. It clarifies that the individual claiming the deduction does not claim any benefit from self-occupied property in any condition.

5) If HRA (House Rent Allowance) is included in your salary, you cannot claim any deduction in house rent. Section 80GG is specially designed for individuals who don’t receive HRA.

6) If you pay more than 1 Lakh as rent yearly, you can claim the tax deductions by submitting a copy of the homeowner’s Pan Card.

7) You should not have claimed HRA in a year in which you are claiming the tax deductions.

8) If you are living with your parents, you can also claim a tax deduction in the rent. The rent agreement should be signed by their parents only.

9) Non-residence Indians can claim the tax deductions as per the Income Tax Act.

For Example:

Zayn Iqbal earns Rs. 60,000 per month and pays Rs. 20,000 rent per month. The deduction he can claim will be the least one out of the 3 amounts.

Standard limit: Rs.5000

Actual Rent - 10% of the income = 20000 - 6000 = 14000

25% of his total income: 15000

The minimum amount here is Rs.5000 per month. So Zayn can claim Rs.60000 as tax deductions annually against the overall rent paid of Rs.2,40,000.

I hope you understood what is Section 80GG of Income Tax Act.