Claim Tax Benefit U/s 80GG Who are not get House Rent With Automated Income Tax Form 16 Part B for F.Y. 2018-19

Section 80GG is one of the 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 to be either a salaried/pensioner or self-employed taxpayers.

Conditions for Claiming Tax benefit u/s 80GG for Rent Paid

You can guarantee charge conclusion on lease paid u/s 80GG at the season of recording government form just if the following conditions are fulfilled:

         The finding is accessible just for people and HUFs

         For a salaried individual to be qualified for tax break u/s 80GG, he ought not to get HRA from his boss.

         Pensioners or Self utilized don't have any HRA thus they can exploit 80GG

         No one in the family including companion, minor kids, self or HUF he is individual from should possess a house in the city you are utilized or conveying your business.

         If you claim a house in the various city, you can't indicate it as self-involved. You need to consider it as regarded to let out – for example – you need to indicate rental pay whether it's really put on the lease.

Moreover, you have to fill structure no 10BA to guarantee tax cut u/s 80GG. This structure isn't to be submitted anyplace yet kept with you for records to show to I-T office if there should be an occurrence of examination.

Download Automated One by One Prepare Income Tax Form 16 Part B for the F.Y. 2018-19

Finding permitted u/s 80GG:

The House Rent finding is least of the underneath 3 numbers:

1.         Rs. 5,000 every month [increased from Rs 2,000 to Rs 5,000 in Budget 2016]

2.         25% of yearly pay

3.         (Rent Paid – 10% of Annual Income)

Expect that Amit has a yearly salary of Rs 5 Lakhs and he pays the lease of Rs 10,000 every month. Here is his tax cut for lease paid.

1.         Rs. 5,000 every month – Rs 60,000

2.         25% of yearly pay – Rs 1,25,000

3.         (Rent Paid – 10% of Annual Income) – Rs 70,000 (1,20,000 – 50,000)

The expense derivation would be least of over 3 numbers = Rs 60,000

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Claim Tax Benefit for Rent Paid U/s 80GG,With Automated All in One TDS on Salary for Non-Govt employees for F.Y.2017-18

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 being either salaried/pensioner or self-employed tax payers.

Conditions for Claiming Tax benefit u/s 80GG for Rent Paid.

You can claim the tax deduction on rent paid u/s 80GG at the time of filing the tax return only if following conditions are satisfied:

1.                  The deduction is available only for individuals & HUFs

2.           For a salaried person to be eligible for tax benefit u/s 80GG, he should not receive HRA from his employer.

3.                  Pensioners or Self-employed do not have any HRA and so they can take advantage of 80GG

4.                  No one in the family including spouse, minor children, self or HUF he is the member of should own a house in the city you are employed or carrying your business.

5.                  If you own a house in a different city, you cannot show it as self-occupied. You have to consider it as deemed to let out – i.e. – you have to show rental income whether or not it’s actually put on rent.

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.

Download: Automated All in One TDS on Salary for Non-Govt employees for F.Y.2017-18

The deduction allowed u/s 80GG:

The House Rent deduction is a minimum of the below 3 numbers:

1.                  Rs. 5,000 per month [increased from Rs 2,000 to Rs 5,000 in Budget 2016]

2.                  25% of annual income

3.                  (Rent Paid – 10% of Annual Income)

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Automatic H.R.A. Calculator U/s 10(13A) + Automatic Income Tax Form 16 for F.Y.2016-17 + HRA Taxability & Section 80GG Deduction on Rent

The tax benefit on HRA is available only to a salaried individual who has the HRA component as part of his salary structure and is staying in a rented accommodation. Self-employed professionals cannot avail the deduction.

Download master of Form 16 Part A&B for F.Y.2016-17, which can prepare at a time 100 employees Form 16 Part A&B

Download Master of Form 16 Part B for F.Y.2016-17, which can prepare at a time 100 employees Form 16 Part B

The exemption for HRA benefit is the minimum of:

i) Actual HRA received

ii) 50% of salary if living in metro cities, or 40% for non-metro cities; and

iii) Excess of rent paid annually over 10% of annual salary (Rent paid minus 10% of Salary)

For Calculation purpose, Salary = Basic Salary + Dearness Allowance (DA) (if it forms a part of retirement benefits) + commission received on the basis of sales turnover

The tax benefit is available to the person only for the period in which the rented house is occupied.

Example of HRA calculation

Let’s say an individual, with a monthly basic salary of Rs 15,000, receives HRA of Rs 7,000 and pays Rs 8,400 rent for an accommodation in a metro city. The tax rate applicable to the individual is 20 percent of his income.

To avail HRA benefit, the least of the following amount  is exempted, rest is taxable:

i) Actual HRA received = Rs 84,000 (7,000 * 12)

ii) 50% of salary (metro city) = Rs 90,000 (50% of Rs 1,80,000)

iii) Excess of rent paid annually over 10% of annual salary = Rs 82,800 (Rs 1,00,800 – (10% of Rs 1,80,000))

It shows that of Rs 84,000 actually received as HRA, Rs 82,800 gets tax exemption and only the balance of Rs 1,200 gets added to the employee’s income, on which a tax of Rs 240 ( 20 per cent slab ) gets payable.

Download Automatic H.R.A. Exemption CalculatorU/s 10(13A) in Excel Format

Documents Required

HRA exemptions can be availed only on submission of rent receipts or the rent agreement with the house owner.

It is mandatory for the employee to report the Pan Card of the ‘landlord’ to the employer if the rent paid is more than Rs 1,00,000 annually, or if it exceeds Rs 15,000 per month.

Individuals who don’t get HRA but pay rent — Section 80GG

Self-employed professionals and Salaried individuals who have not received HRA but they actually paid the rent can claim deduction under section 80GG.

Amount of Deduction — Section 80GG

The least of the following is available for exemption from tax under Section 80GG:

(i) Rent paid in excess of 10% of Adjusted Income (Rent Paid minus 10% of Adjusted Income)

(ii) 25% of the total of the Adjusted Income

(iii) Rs 5,000 per month

Example of Section 80GG

Mr. A annually earns Rs. 3,00,000 (after all deductions) and pays an annual rent of Rs. 1,50,000. In such a case, the deduction allowed would be least of the following;

1. 5000 per month i.e. Rs 60,000 per annum
2. 25% of 3,00,000 i.e. Rs 75,000
3. 1,50,000 minus 10% of 3,00,000 i.e. Rs 1,20,000

Deduction allowed under section 80GG is least of the above i.e. Rs 60,000

A) Deduction under Section 80GG for Rent paid is only available to an Individual or HUF.

B) The taxpayer is either Self-employed or Salaried (but does not receive any benefit of deduction under Section 10(13A) for House Rent Allowance.

C) The taxpayer himself or his spouse or Minor child should not own any accommodation at the place where he is employed or carries on his business or profession.

D) If the taxpayer owns any property at any place other than the place mentioned above, he should not be claiming the benefit of that property as self-occupied property. That other property would be deemed to be let out.

E) Individual needs to file the declaration in form 10BA that he satisfies all the conditions stated above.

DownloadForm 12 BA in Excel Format.

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