Home > Income Tax > Deductions > Section 80GG – Deduction in respect of rent paid

Section 80GG – Deduction in respect of rent paid

U.C Date : 29 Feb 2016

  • Only individual and HUF are allowed exemption under this section.
  • Only rent paid for purpose of residence of asseessee himself is considered under this section.
  • If individual is a salaried employee and receives House Rent Allowance (HRA) at any time during the previous year, he is not eligible for deduction.
  • The individual, his spouse or minor child (including step or adopted child) or HUF of which he is a member must not own a residential accommodation at a place where he ordinarily resides or performs duties of his office or employment or carries on his business or profession.
  • Also if the assessee (only assessee not any other person mentioned above) owns a residential accommodation at any other place but claims it as a self occupied property under head House Property, exemption is not available under this section.
  • Declaration under form 10BA is required to be filed.

Calculation of deduction:-

The amount deductible is least of the following:-

  1. Rs. 2000 per month (Rs. 5,000 per month from financial year 2016-17)
  2. 25% of total income
  3. Rent paid – 10% of total income

Total income excludes long term capital gain, short term capital gain under section 111A and income referred to in section 115A or 115D. But deductions under section 80C to 80U (except section 80GG itself) are deducted for calculating such total income.

Bare Act for Sec 80GG

Bare Act for Sec 80GG

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, and subject to such other conditions or limitations as may be prescribed, having regard to the area or place in which such accommodation is situated and other relevant considerations :

Provided that nothing in this section shall apply to an assessee in any case where any residential accommodation is—
(i) owned by the assessee or by his spouse or minor child or, where such assessee is a member of a Hindu undivided family, by such family at the place where he ordinarily resides or performs duties of his office or employment or carries on his business or profession; or
(ii) owned by the assessee at any other place, being accommodation in the occupation of the assessee, the value of which is to be determined [under clause (a) of sub-section (2) or, as the case may be, clause (a) of sub-section (4) of section 23].
Explanation.—In this section, the expressions “ten per cent of his total income” and “twenty-five per cent of his total income” shall mean ten per cent or twenty-five per cent, as the case may be, of the assessee’s total income before allowing deduction for any expenditure under this section.]

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