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Deductions: sec80gg and sec80d based queries

yashsr (CA) (2285 Points)

23 March 2012

80GG: The agreement is in name of one person of the family but the rent(say about Rs.25000 per month) being quite high, 5 members from the family contribute the same. Now, can each of them take a deduction of Rs.2000 per month i.e. Rs.24000 annually or will the person under whose name agreement is can only take?

80D: Mediclaim of about Rs.25000 is paid by a person from his bank account for himself, his wife, his mother, father and his brother. Now will this amount be available as a deduction to him or to each of his family members?

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Sonam Bidasaria (CA) (770 Points)
Replied 23 March 2012

Sec 80GG reads as under:

"In computing the total income of an assessee, not being an assessee having any income falling within clause (13A) of section 10, there shall be deducted any expenditure incurred by him in excess of ten per cent of his total income towards payment of rent (by whatever name called) in respect of any furnished or unfurnished accommodation occupied by him for the purposes of his own residence, to the extent to which such excess expenditure does not exceed two thousand rupees per month or twenty-five per cent of his total income for the year, whichever is less, .....................................

I am not sure, but I think every member can be deemed to pay rent for their own residence and such claim can be taken. However

Under section 80GG,"expenditure incurred by him in excess of ten percent towads payments or rent is deductible"

and

further such excees expenditure should not exceed Rs. 2,000/ month or 25% of his total income of the year"

In other words, if rent paid is less than 10% of total income of individual, no deduction will be allowed.

Assuming, every member is paying Rs. 5000 rent per month, then, every member must have total income before allowing deduction of 80GG of atleast Rs. 5000*10*12 = Rs. 6,00,000.

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Sonam Bidasaria (CA) (770 Points)
Replied 23 March 2012

Aggregate premium paid for the insurance on the health of assesseee and his wife should not exceed Rs. 15,000. Aggregate premium paid for the insurance on the health of mother / father should not exceed Rs. 15,000. (Rs. 20,000 in case parents are senior citizen). Deduction for premium paid on the health of brother, shall not be allowed as "Brother" is not covered in the definition of "Family" specified in this section.

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yashsr (CA) (2285 Points)
Replied 23 March 2012

Thanks! Further, I'd like to know:

1) 80GG: While obtaining this deduction, we're required to submit a declaration in Form No.10BA. Now, does this form only has to be kept on record or does it have to submitted through return of income i.e. ITR?

2) 80D: In my example given at the start of this topic, Is there any chance that instead of the person who paid medi-claim, the members in whose name the medi-claim policy is can take deduction?

yashsr (CA) (2285 Points)
Replied 23 March 2012

Originally posted by : Sonam Bidasaria
Assuming, every member is paying Rs. 5000 rent per month, then, every member must have total income before allowing deduction of 80GG of atleast Rs. 50001012 = Rs. 6,00,000.