Section 80GG of Income Tax Act: All you need to know
Understanding Section 80GG
Section 80GG of the Income Tax Act provides tax deductions for individuals paying rent but not receiving House Rent Allowance (HRA) from their employer. This deduction helps taxpayers reduce their taxable income, making housing more affordable.
Eligibility Criteria for 80GG Deductions
Who Can Claim Tax Deductions under Section 80GG?
To claim tax deductions under Section 80GG, an individual must meet the following criteria:
- They should be salaried or self-employed.
- They must not receive HRA as part of their salary.
- They, their spouse, or minor child should not own residential property at the place of employment.
- They should not have any self-occupied residential property in any other location.
Calculating Deductions Under Section 80GG
How are Deductions Calculated?
The deduction under Section 80GG is the least of the following amounts:
- ₹5,000 per month.
- 25% of the total income (excluding capital gains, short-term capital gains, and deductions under Sections 80C to 80U).
- Actual rent paid minus 10% of total income.
Filing Form 10BA for 80GG Deductions
How to File Form 10BA?
To claim deductions under Section 80GG, taxpayers need to file Form 10BA. This form is a declaration that the taxpayer, spouse, or minor child does not own any residential property at the place of employment or elsewhere.
Accessing Form 10BA
Where can you find Form 10BA?
Form 10BA can be accessed and filed online through the official Income Tax Department's e-filing portal. The form requires basic details such as the taxpayer’s name, address, and rental payment information.
Tax Deductions for Property Owners under Section 80GG
How can Property Owners Benefit?
Property owners who meet the eligibility criteria can claim deductions under Section 80GG. However, they must ensure they do not own residential property at their place of work or in any other location, and they must file Form 10BA.
Required Documentation for Section 80GG Deductions
Documents Needed for Claiming Deductions
To claim deductions under Section 80GG, the following documents are required:
- A filled Form 10BA.
- Rent receipts or rental agreement(s).
- Details of the landlord such as name and address.
- PAN of the landlord if rent exceeds ₹1,00,000 per year.
Conclusion
Section 80GG provides a valuable tax benefit for individuals paying rent without receiving HRA. By understanding the eligibility criteria, calculation methods, and required documentation, taxpayers can effectively reduce their taxable income. Ensure to file the necessary forms and maintain proper records to take full advantage of this deduction.
Am I allowed to claim deduction under Section 80GG if I am not living in a rented residential property?
No, you cannot claim tax deduction under Section 80GG if you are not living in a rented property. You have to submit all rental receipts in order to claim deductions on your taxable income.
I split the rent with my roommate but the rental agreement is in his name, how can I claim deductions in this case?
You cannot claim tax benefits provided under Section 80GG without having the rental agreement under your name. You can ask your landlord to renew the rental agreement both and include you and your roommate separately as the renters/tenants.
What is adjusted annual income?
Adjusted income refers to the total income excluding short term capital gains as per Section 111A, long term capital gains, income under Section 115A and 115D, and deductions under Section 80C to 80U of the Income Tax Act.
Can non-resident Indians also claim tax deductions under Section 80GG?
Yes, both resident and non-resident individuals can use the provisions given under Section 80GG to enjoy tax benefits on rent paid.
How Section 80GG is different from Section 10 (13A) of the Indian Tax Act?
Section 80GG allows self-employed and salaried employees who do not get HRA to claim tax deduction benefits on the payment of rent. Section 10 (13A), on the other hand, is meant for salaried employees who receive HRA from their employers.