Section 80GG is one of lesser known sections which can be used by taxpayers to lessen their tax burden by claiming tax exemption for rent paid (in case HRA is not part of salary). This section can be used by be either salaried/pensioner or self-employed tax payers.
You can claim tax deduction on rent paid u/s 80GG at the time of filing tax return only if following conditions are satisfied:
Additionally, you need to fill form no 10BA to claim tax benefit u/s 80GG. This form is NOT to be submitted anywhere but kept with you for records to show to I-T department in case of scrutiny.
The House Rent deduction is minimum of the below 3 numbers:
Here Annual income refers to
Minus
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Assume that Amit has annual income of Rs 5 Lakhs and he pays rent of Rs 10,000 per month. Here is his tax benefit for rent paid.
The tax deduction would be minimum of above 3 numbers = Rs 60,000
Tax exemption under section 80GG is part of Chapter VI A and has to be filled as you do for Section 80C in the ITR Forms.
In case you were salaried receiving HRA for some part of the financial year but paid rent for the entire year, you can claim benefit under both HRA & Section 80GG. For the period you received HRA, you should claim tax benefit on that through your employer. For rest of months you would get tax benefit u/s 80GG.
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Hello
Can you tell what to do if following in the case:
As self employed I pay Rs. 7600 per month rent in cash to Landlord
But i don't have any proof of this i mean rent receipts, or rent agreement nothing so how i can claim this under 80GG?
Landlord is 80 years old person not high educated, don't have any knowledge of tax, he don't file ITR and he will not give rent receipts nor he will sign on any receipt even if i give him from myself, don't have rent agreement because i'm living and paying him rent from 5 years so first 3 years he did rent agreement after that he got health issues so no agreement from two years just living and paying rent.
At most what he can do is if someone ask him face to face then he tells that i live on rent with him and pay him monthly etc otherwise nothing in written!
So is there any solution of this weird case or i think not?
Thanks
The maximum amount you can claim through Section 80GG is Rs 5,000 per month. I don't think there would be scrutiny for such amount as even for salaried payer they do not need PAN number if the rent is less than Rs 8,250 per month.
However in rare case of scrutiny, the only option you have to get rent receipt from your landlord. As the rent is paid in cash you have no other proof. Also this would be easy if your landlord is paying tax on this rental income. If not its almost impossible to proof that you paid rent and how much!
Hello Amit, thanks for clearing this you have written one line that:
(Also this would be easy if your landlord is paying rent on this rental income.)
with this you mean if landlord is paying income tax on rental income? bit confused with "rent on this rental income"
Also one thing wanted to ask for future, if in future i pay cheque per month rather then cash this will consider as any proof?
Thanks
Sorry for the typo - have corrected that (rent to tax).
If you pay by cheque or though online transfer at least you have a transaction to put your point. In cash you have NO say!