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.
