An individual who is not in receipt of HRA makes payment towards rent for accommodation (furnished or unfurnished) for the purpose of his own accommodation can claim deduction under section 80GG towards the rent paid by him.
The admissible deduction will be the least of the following:
1) Actual rent paid minus 10% of his total income
2) 25% of his total income
3) Rs. 5,000 per month
a) Total Income means assessee’s total income before allowing deduction for any expenditure under this section.
b) The assessee should not be in receipt of HRA
b) The assessee will have to file a declaration in Form No 10BA
The following conditions need to be met to claim deduction under this section:
1. The assessee or his spouse or his minor child or HUF in which he is a member – do not own any residential accommodation at the place where the assessee currently reside, perform duties of office, or employment or carry on business or profession.
2. The assessee should not own any residential property at any place, for which Income from house Property is calculated under applicable sections.
Mr.Athul, a small businessman, earns Rs. 6,60,000 for FY 2019-20. He paid house rent of Rs. 12,000/month in respect of residential accommodation occupied by him at Bangalore. It is assumed that all the conditions to claim Section 80GG is satisfied by him. The eligible deduction will be the least of the following:
In the above example Mr. Athul can claim a maximum deduction of Rs.60,000 under Section 80GG towards the rent paid by him.