Rents paid are subject to deductions: Under Segment 80GG, an Individual can guarantee allowance for the lease paid regardless of whether he get HRA. Under Section 80GG, this deduction is not widely known.

Segment 80GG permits the People to a derivation in regard of house lease paid by him for his own home. This deduction is allowed, but only under the following conditions:

1. a) The individual does not qualify for an exemption under section 10(13A) of the Act if he or she has not been receiving a House Rent Allowance specifically granted to him by his employer;
2. b) The person submits the declaration on Form No. 10BA.  

(c) The worker doesn’t possess:

(i) any place where he, his spouse, or a minor child live, or, if the individual is a member of a Hindu Undivided Family, his family, at the location where he typically resides or carries out his office, business, or profession; or (ii) at any other location, any residential accommodation, the value of which is to be determined in accordance with Section 23(2)(a) or Section 23(4)(a), depending on the situation.

1. d) He will be eligible for a deduction equal to 25% of his total income, or Rs., for house rent paid in excess of 10% of his income. 2,000/ – each month (Rs. 5000/- annually from 2016 to 2017), whichever is less. The all out pay for working out these rates will be registered prior to making any derivation under segment 80GG. To put it another way, eligibility will be limited to the following:

1) The amount paid for rent less 10% of the adjusted total income.

2) Rs. 2,000 per month (Rs. 5000/- for the financial year 2016-17).

3) 25% of the total adjusted income.

If an assessee owns a residential property in another location that he is occupying and claims concessions for self-occupied housing for that property, he will not be eligible for the deduction allowed by Section 80GG. In such a case, no derivation will be permitted in regard of the lease paid, regardless of whether the individual own any private convenience where he customarily lives.

What is the adjusted total income under section 80GG? 

The adjusted total income means :-

Gross Total Income 

Less 

Long Term Capital Gain, 

Short Term Capital Gain  of 10% category, 

Deductions under sections 80C to 80U except section 80GG and income of foreign company.

End Cutoff under Sec. 80GG has not stayed up with the cutoff points under Sec. 10(13A), evidently because the limit outlined in 10(13A) could be topic of amendment by notice, while the cutoff under Sec. Because 80GG is written into the law, it would be necessary to change the law to raise the limit.

Download Format of  FORM NO. 10BA 

Extract of section 80GG 

Section – 80GG, Income-tax Act, 1961-2014 

Deductions in respect of rents paid.

80GG. In processing the all out pay of an assessee, not being an assessee having any pay falling inside statement (13A) of segment 10, there will be deducted any consumption caused by him more than 10% of his complete pay towards installment of lease (by anything that name called) in regard of any outfitted or empty convenience involved by him for the reasons for his own home, to the degree to which such overabundance use doesn’t surpass [five] thousand rupees each month or 25% of his absolute pay for the year, whichever is less, and dependent upon such different circumstances or limits as might be endorsed, having respect to the area or spot in which such convenience is arranged and other important contemplations :

Given that nothing in this segment will apply to an assessee regardless where any private convenience is —

(I) possessed by the assessee or by his life partner or minor youngster or, where such assessee is an individual from a Hindu unified family, by such family where he usually lives or performs obligations of his office or work or carries on his business or calling; or (ii) accommodation in the assessee’s occupation that is owned by the assessee at any other location and whose value is to be determined in accordance with clause (a) of sub-section (2) or, if applicable, clause (a) of sub-section (4) of section 23.

Explanation: The terms “ten percent of his total income” and “twenty-five percent of his total income” refer to the assessee’s total income before allowing deductions for expenses incurred in accordance with this section, respectively.

FAQs

How does Section 80GG work and what does it mean?

Segment 80GG permits a person to guarantee a derivation on the lease that is paid towards an outfitted or empty house. They need to be using the house as a place to live. In this context, we refer to deductions as the amount you can deduct from your year’s gross income to calculate your net taxable income, which would be subject to income tax.

How do I get the 80GG deduction?

People need to document Structure 10BA prior to asserting this derivation by choosing the old expense system. The Income Tax Act’s section 80GG deduction cannot be used to offset short-term capital gains under section 111A, long-term capital gains, or income subject to special tax rates.

What is Section 80GG?

In accordance with Chapter VI-A of the Income Tax Act of 1961, Section 80GG provides those who do not take advantage of the house rent allowance with a tax break. A person must be living in a rented property in order to be eligible for this section’s tax deduction.