Deduction in Income Tax for Rent paid

Deduction in Income Tax for Rent paid


Deduction in Income Tax for Rent paid

Section 80GG of Income Tax Act 1961 allows the Individuals to a deduction in respect of house rent paid by him for his own residence. Such deduction is permissible to self employed person, salaried person subject to the following conditions:-

(a)  the Individual has not been in receipt of any House Rent Allowance from his employer specifically granted to him which qualifies for exemption under section 10(13A) of the Income Tax Act 1961;

(b) the Individual files the declaration in  Form No. 10BA.

(c) The employee does not own any residential accommodation himself or by his spouse or minor child or where such Individual  is a member of a Hindu Undivided Family.

(d)The employee does not own at any other place, any residential accommodation being accommodation in the occupation of the Individual, the value of which is to be determined under Section 23(2)(a) or Section 23(4)(a) as the case may be.

Deduction in respect of house rent paid under section 80GG of Income Tax Act 1961  subject to lower amount of the following :-

1) Rent paid minus 10 percent the adjusted total income.

2) Rs 5,000 per month

3) 25 percent of the adjusted total income.

Adjusted total income under section 80GG of Income Tax Act 1961 

The adjusted total income means Gross Total Income as reduced by:

  • Long Term Capital Gain,
  • Short Term Capital Gain  of 10% category,
  • Deductions under sections 80C to 80U except section 80GG
  • Income of foreign company.

Documents required to claim deduction under Section 80GG

  • Employee needs to furnish documents like rent agreement and rent receipts.
  • If your annual rental payment exceeds Rs. 1 lakh then you also need to furnish PAN details of your landlord.
  • To claim deduction under section 80GG, he also needs to file Form 10BA.