The limit of deduction of rent paid under 80 GG from Rs 24,000 per annum to Rs 60,000 to provide relief to those who live in rented houses,” said Finance minister Arun Jaitley while presenting the Budget for 2016-17 on 29 Feb 2016 . We have got many questions on whether one will be able to claim higher HRA now. For a salaried employee who gets HRA there is no change in HRA. This HRA limit is all other taxpayers,example self employed professionals ,who are neither getting benefit of House Rent Allowance nor have they claimed the expense for rent paid under any other section of the income tax act and claim deduction under Section 80GG. This article talks about HRA, HRA under section 80GG,conditions for claiming HRA under section 80GG,how to claim HRA under 80GG, who can claim HRA under 80GG,Form 10BA.
Download Income Tax Calculator for Financial Year 2015-16 and Assessment Year 2017-18
What is HRA? What is House Rent Allowance?
House Rent Allowance or HRA is given by the employer to the employee to meet the expenses of rent of the accommodation which the employee has taken for his residential purpos. Salaried individuals who live in a rented house can claim House Rent Allowance or HRA to lower taxes. This can be partially or completely exempt from taxes. The allowance is for expenses related to rented accommodation. If you don’t live in a rented accommodation, this allowance is fully taxable. House Rent Allowance (HRA) Exemption would be calculated by your employer and shown in Form 16 if rent receipt are submitted on time.
Download HRA Exemption,Calculator U/s 10(13A)
What is section 80GG?
Section 80GG provides for Deductions for House Rent paid, provided that a deduction for payment of House Rent has not been claimed under any other section of the income tax act. In other words, if a salaried employee is being given house rent allowance by his employer and he is claiming a deduction from the same, he won’t be eligible to claim deduction under Section 80GG for payment of Rent. All other taxpayers who are neither getting benefit of House Rent Allowance and nor have they claimed the expense for rent paid under any other section of the income tax act, can claim deduction under Section 80GG. HRA limit under section 80GG has been proposed to be increased from 24,000 to 60,000 Rs.
What if my employer doesn’t provide me with HRA can I use 80GG?
If you are making payments towards rent for any furnished or unfurnished accommodation occupied by you for your own residence, but do not receive HRA from your employer, and you meet 80GG conditions you can claim deduction under section 80GG.
What are the conditions one has to meet to claim HRA under Section 80GG?
Under section 80GG of income tax act, 1961, a self employed person, businessman and even a salaried person can claim tax deduction for the expenses that they incur towards there house rent.
· You are self employed or salaried
· You have not received HRA at any time during the year for which you are claiming 80GG. If you are a salary person then you should not be in receipt of house rent allowance
· You or your spouse or your minor child or HUF of which you are a member , do not own any residential accommodation at the place where you currently reside, perform duties of office, or employment or carry on business or profession.
· You should not own a house in the place in which you live, or work or carry on business
· Your spouse, child including minor child, Hindu undivided family (of which you are member )should not own any residential accommodation in that place
· You must reside in that house to claim exemption. Any one with you can also stay with you for the purpose of claiming this deduction under section 80GG.
· If own any residential property at any place, for which you have income from house property under applicable sections (as a self occupied property), no deduction under section 80GG is allowed. So If you own a house in some other city and use that house for your own resident and have not given for rent then also you can not claim deduction under section 80GG even though you stay in a rented house and pay rent at your work location in a different city.
If the taxpayer is claiming deduction under Section 80GG, he would also be required to furnish a declaration in Form 10BA that he satisfies all the conditions stated above.
