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DED U/S 80 GG

SANDEEP GARG (ARTICLE) (43 Points)

22 April 2009

CAN A SALARIED PERSON WHO RECEIVING RFA AND PAYING RENT TO EMPLOYER TAKE DEDUCTION U/S 80GG FOR PAYING RENT

PLS REPLY TO ME WHO KNOW ABOUT THIS

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3 Replies

BALASUBRAMANYA B N (CCI STUDENT....) (44679 Points)
Replied 22 April 2009

www.caclubindia.com/forum/message_display.asp

see above link for ur query

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vijay (.) (212 Points)
Replied 24 April 2009

This answer was orignally posted by Mr. Rahul.

Any individual can claim the deduction u/s 80GG. Irrespective of whether you are a salaried individual, or a business person, you can claim deduction under Sec 80GG.

Of course, you need to be paying rent, and for your own accommodation.

Thus, if you are paying rent for a house where your parents live, you can not claim deduction u/s 80GG. Similarly, if you are staying in a house but your spouse is paying the rent, you can not claim any deduction.

You can claim deduction for either furnished or unfurnished accommodation.

Restrictions on claiming the deduction

There are certain restrictions in this section. You can not claim deduction u/s 80GG if:

You receive HRA from your employer (or you received HRA from your current or previous employer at any time in the year)
You or your spouse or your minor child owns a house at the place (city / town / village) where you normally stay, work or conduct business
You are a member of a Hindu Undivided Family (HUF), and the HUF owns a house at the place where you normally stay, work or conduct business
You own a house at any other place and claim concessions of self-occupied house property for it (For example, tax benefit of a home loan for the house)

Amount of deduction under section 80GG

So, how much can you claim as deductible u/s 80GG?

The amount allowed as deduction is the minimum of the following:

Rent / lease amount paid less 10% of your total income
Rs. 2,000 per month
25% of your total income

Here, Total Income means:

Your Gross Total Income

Less long term capital gain, and short term capital gain that would be charged at a concessional tax rate (like STCG from sale of shares)

Less all deductions other than the deduction under Section 80GG

Other Conditions

Form 10BA

You need to declare that you are paying the rent. This has to be done by filling up and filing from 10-BA.

City / Municipality

The deduction u/s 80GG is available only if the house is situated within specified municipal areas. However, all major cities are a part of the specified municipal areas.

Example

Let's assume the following (amounts per annum):

Basic: Rs. 4,00,000
DA: Rs. 50,000

You pay a rent of Rs. 5,000 per month.

Here, the deduction that you can claim is the minimum of:

1. Rent / lease amount paid less 10% of your total income:

(Rs. 5,000 * 12) – 10% of (Rs. 4,00,000 + Rs. 50,000)
= Rs. 60,000 – Rs. 45,000
= Rs. 15,000

2. Rs. 2,000 per month

That is, Rs. 24,000 per year.

3. 25% of your total income

25% of (Rs. 4,00,000 + Rs. 50,000)
= Rs. 1,12,500.

Thus, you would be able to claim a deduction of Rs. 15,000.

This answer was orignally posted by Mr. Rahul.

Atul Kumar (CA) (504 Points)
Replied 24 April 2009

Deduction u/s 80GG is available to a person who is not getting HRA if he is in employment or for a self employed person. In such case, he is eligible for a Max. Deduction of Rs. 2,000/- per month.