As per the rules, salaried employees who received HRA at any time during the year can’t claim deduction under section 80GG on rent paid. It is available only as be below conditions.
The deduction limit under the section is ₹60,000 per year.
Individual or HUF, self-employed or salaried not receiving HRA from their employer at any time during the year.
The Assessee, his/ her spouse, minor child or HUF of which he is a member shall not own any residential accommodation at a place where he currently resides, is currently employed or carries on business or profession.
If the Assessee owns any residential property at any other place then the same should not be assessed as self-occupied residential property.
The Assessee must be paying rent.
Amount of Deduction
The deduction will be lowest of:
Rs.5,000/- per month
25% of Adjusted Total Income
Rent Paid Less 10% of Adjusted Total Income
Meaning of Adjusted Total Income
Adjusted Total Income means Income excluding:
Long Term Capital Gain
Short Term Capital Gain under 111A or section 115D
Deduction under section 80C to 80U
Also, deduction under section 80GG is to be excluded.
The Assessee needs to file Form 10BA containing details of payment of rent before the filing of return.
Mr. A pays a rent of Rs. 10,000/- per month. His total income before deduction under section 80GG is Rs. 4,80,000/-. The deduction that will be allowed to him under section 80GG will be as follows:
Amount calculated at Rs.5,000/- per month = Rs.60,000/-
25% of Total Income (Rs.4,80,000/- X 25%) = Rs.1,20,000/-
Rent Paid Less 10% of Total Income [(Rs.10,000/- X 12) - (10% X Rs. 4,80,000)] = Rs. 72,000/-
Lowest of above is Rs. 60,000/- which will be allowed as deduction under section 80GG.
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