Deduction u/s 80GG: Deduction in respect of Rent Paid

Deduction u/s 80GG

In this article we discuss about the deductions in respect of rent paid. This deduction is available to individual in case of rent paid.

Section 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 @ 10 % of his total income towards payment of rent in respect of any furnished or unfurnished accommodation occupied by him for the purpose of his own residence,

to the extent to which such excess expenditure does not exceed Rs. 5000/- per month or

@ 20% 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-

  • Owned by the assessee or by his spouse or minor child or, where such assessee is a member or 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
  • 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 expression “ten percent of his total income” and “twenty-five percent of his total income” shall mean ten percent or twenty-five percent, as the case may be, of the assessee’s total income before allowing deduction for any expenditure under this section.

Summaries:-
Deduction available

This deduction is available to individual only whether he is self-employed or salaried.

Condition
  • Individual paid house rent for own residence.
  • Individual has not been received HRA (House Rent Allowance) from his employer at any time during the pervious year to claim exemption u/s 10(13A). So, an individual can take the benefit of rent paid for his own residence in one section either in section 10(13A) or section 80GG.
  • Employees does not own:
      1. Any residential accommodation himself or spouse or minor child or where such individual is a member of HUF, 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
      2. At any other place, any residential accommodation being accommodation in the occupation of the individual, the value of which is to be determined u/s 23(2)(a) or u/s 23(4)(a) as the case may be.
Deduction Amount:

The lowest of the following to be considered as deduction u/s 80GG:

  • 5000 per month
  • Actual rent paid less 10 % of his total income
  • 25 % of his total income

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