HRA or 80GG

If an employee worked in an organisation from April 08 to Aug 08 for a salary with HRA. And that employee worked in another organisation from Sept 08 to March 09 for a basic total slary without any HRA. Now my question is whether that employee will get HRA exemption or 80GG deduction ? Or he will get the both on proportionate basis? If he left 1st Company in the middle of the month then what will be the treatment? Will it be changed ?

Hints points:

  1st Company 2nd Company
Monthly April 08 - Aug 08 Sept 08 - Mar 09
Months 5 7
Basic 16000 25000
HRA 5000  
Rent 5000 5000

Hints answer:

Exemption u/s 10(13A) Rule 2A    
Total HRA 25000 0
50% of Basic 40000 87500
Rent Paid - 10% of Salary 17000 17500
HRA exemption u/s 10(13A) 17000 0
     
Rs 2000.00 per month 0 14000
25% of total income 0 43750
Rent Paid - 10% of Salary 0 17500
Deduction u/s 80GG - Minimum 0 14000

 

Replies (4)

  • Where the rent paid is equal to HRA, then one can choose between either rent free accommodation or receiving HRA.

  • It is never beneficial to receive an amount as a special allowance and to claim 80GG deduction. The deduction under 80GG (in normal cases) will always be less than exemption under 10(13A) for HRA. Hence HRA is always beneficial than 80GG deduction.

For More on this : https://sify.com/finance/tax/fullstory.php?id=12625835

My Question was different. It is not the question of beneficial section it is about if an assessee in his 1st organsiation received HRA for 5 months in previous year and left that organisation and joined 2nd organisation where he has not received any HRA in his salary then how he will avail deduction / exemption for his rent payment for his resident. 
 

Whether he will take HRA exemption for 5 months and 80GG deduction for rest 7 months? Or he will take HRA exemption for 12 months and Nil deduction u/s 80GG (Because as per section 80GG - Deduction u/s 80GG can be availed if assessee not received any HRA in the previous year).

Please reply

 

Dear Mr. Surjit,

If a person is not receiving HRA and He is employee and paying Rent then he can claim deduction of the same u/s 80 GG. Accordingly you will have to claim HRA for 5m and deduction u/s 80 GG for 7m. The person can not claim both at the same time.

Thanks & Regards

Hitesh

 

Mr Hitesh..

Your points should be accepted ... Thanks

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