Rent paid deduction

Rent paid deduction
- If you are not getting house rent allowance and you live in a rented house, then do not worry, you will get income tax exemption for payment of rent.

Section 80GG of the Income Tax Act 1961 provides that a salaried person can claim deduction under section 80GG of the house rent payment by fulfilling certain conditions.

However, exemption from payment of rent can also be claimed by a person carrying on business or profession under section 80GG.

In today's article (rent paid deduction in Hindi), we will discuss about the rules of tax deduction for house rent payment.

Who can get income tax deduction on payment of rent?

Section 80GG of the Income Tax Act, 1961, can be claimed for deduction of house rent payment by a salaried or self- employed person.

How much deduction can be claimed under section 80GG for payment of house rent?

The exemption for the rent payment of the house which is used for living by the taxpayer can be taken for the lowest amount mentioned below, –
  • Total Rent Payment – ​​10% of Basic Salary
  • 60,000
  • 25% of adjusted total income 
The least amount out of these three will be given as deduction in section 80GG. The maximum deduction can be of 60 thousand.

* Adjusted total income is arrived at by deducting the deductions from section 80C to section 80U of Long Term Capital Gain, Short Term Capital Gain (Section 111A) & Section 80U from the total income.

What will be the mode of getting deduction of rental payment?

Claiming deduction under section 80GG is also very easy.

For example, your total income is 5 lakh, this income includes capital gain of 50 thousand and salary of 4,50,000. 8000 per month house rent is given by you, then in this case how much deduction will be given for rent payment in section 80GG?

SOLUTION – The least of the three amounts mentioned below will be exempted in section 80GG –
  • 96,000 (Annual Rent Payment) – 45000 (10% of Basic Salary) = 51,000
  • 60,000
  • 4,50,000 * 25% = 1,12,500 (25% of adjusted total income)

The lowest of the three amounts is 51,000, so maximum deduction of 51,000 can be claimed under section 80GG in this case.

FAQ about rent paid deduction in hindi

Q – Can a salaried employee claim exemption in both HRA and section 80GG.

ANS – No, rent payment exemption under section 80GG can be claimed only in case the employee is not getting HRA. If the employee is getting HRA, then he will not be eligible for exemption in section 80GG.

Q – I got HRA for only one month in a year, can I claim deduction under section 80GG?

A – Exemption in section 80GG can be claimed only if you have never received HRA in the whole year, if you have received HRA even once in a year, then you are ineligible to take exemption in section 80GG.

Q – Will the deduction of section 80GG be included in the limit of 1.50 lakh under section 80C?

A – No, the limit of section 80GG is available in addition to the limit of section 80C.

Q – Can I get exemption in section 80GG even if I choose the new tax slab?

A - No, you will not be given exemption in this section if you choose to pay tax in the new tax slab.

Q – What to do to claim exemption in section 80GG?

A – To claim exemption on payment of house rent, the correct deduction has to be claimed at the time of filing income tax return and then Form 10BA has to be filed on the income tax portal.

Q – I live in a rented house in a city, but I also have my own house there, so can I take the exemption for payment of rent?

A – Exemption for payment of rent under section 80GG can be taken only in case you live in a rented house and you or your spouse do not have any house at that place. So in this case you cannot claim deduction.

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