Blogs > Section 80GG House Rent Allowance (HRA) Deduction for AY (2021 22)
Section 80GG House Rent Allowance (HRA) Deduction for AY (2021 22)
The Income-tax Act of 1961 enables a person to claim deductions for the rent paid by him under Section 80GG. It is for individuals who do not get the benefit of House Rent Allowance(HRA) from their employer. Moreover, it applies to both salaried and non-salaried individuals. The deduction of house rent is one of the easiest ways to save tax on salary.
Know about Section 80GG
The Section 80gg allows an individual to claim a deduction in respect of the house rent paid by them. In fact, this clause is especially useful to employees who do not receive the HRA benefit form their employees. The tax exemption under this section can vary according to the income tax slabs, and your salary. In fact, the city you are living in (like Tier-1, Tier-2, and Tier-3), your HRA (if received), and the amount of rent are also important factors.
When you can claim for Section 80GG for the AY 2021-22?
As per the new tax rates introduced for FY 2020-21 (AY 2021-22) in the Budget 2020, the benefit of reduced tax rates can be claimed if the taxpayer opts to forego benefits available under various income tax deductions and exemptions except for section 80CC(2) and 80JJAA.
- If you want to claim tax benefit u/s 80C,80D, HRA etc then you should opt for old tax rates.
- It is mandatory to be an individual or a member of a Hindu Undivided Family (HUF).
- You can be a self-employed or a salaried individual.
- You should not have received HRA at any time of the year you are claiming the deduction by 80gg.
- Your spouse, you or your minor child or HUF of which you are a member do not own any residential property at the place where you presently reside, perform duties of the office or employment, or carry on business or profession.
- It is mandatory to fill and submit Form 10BA to disclose your rent details and declare that you are not claiming the benefit of Self-Occupied Property on the house in any other location or in the same location you are employed.
- If the rent paid by you is more than Rs.1 lakh, the PAN of the owner is a mandate.
- In case of owning a residential property and the income from that property is disclosed under applicable sections, you are not eligible for the 80gg benefit.
What is a deduction limit given to a taxpayer under Section 80GG?
You can claim a deduction from the following applicable clauses:
· Rs. 5,000 per month or Rs.60,000 annually,
· 25% of the total income (excluding long-term capital gain, short-term capital gain, and other deductions under Section 80C to 80U)
· The total rent paid minus 10% of the total income.
Section 80GG is the best way to save tax on your salary for a salaried or non-salaried individual.
