Deductions on House Rent under Section 80GG

Section 80GG – Income tax act, 1961 promotes the policy of good standard of living under which Any person who doesn’t own his house and lives on a rented place can claim deduction of the rent paid to the owner being employed and not receiving any allowances for the rent paid from his employer.

Following the foreign culture of working as a employee rather than being a businessman, person might have to re-locate to the place of employment which is different than his place of family residence. So incurring one of the basic and monthly expense of rent can be allowed as a tax-free to the limit prescribed from the amount of salary credited.

So all the tenants grab this benefit over your Rent incurred under Section 80GG of Income Tax act,1949

Section 80GG – Defining the Eligibility criteria :

1. The foremost condition is non receipt of any House Rent allowance from employer.

2. Employee, spouse or children should not own any house in their name at the place of employment.

3. The employee should not be showing in his return and assessed as occupying his house property as self-occupied at any other place.

4. The employee should make the actual payment of Rent where he resides through cash or Cheque or any mode of online banking but outflow of money as rent has to be proven.

Also Read: Section 80 GGA – Deduction On Donation

Amount Eligibility:

The amount which is available for deduction will be minimum of the following:

a) Rent paid minus 10% Total Income.

b) Rs. 2000 per month (up-to Fy 16-17 and then it will be replaced with Rs.5000 p.m)

c) 25% of Total Income.

So any person incurring rent expense can claim deduction and reduce the tax burden easily, living in a rented house. So this a extra benefit for the small employees working and doesn’t receive any benefits from their employer on the expense incurred on rent.