Overview of Section 80GG Over Deduction for the Rent Paid

Section 80GG of the Income Tax Act,1961 tells about the deduction towards the rent paid, as under

Section 80GG of IT Act, 1961:

In calculating the taxpayer's total income, not the taxpayer securing any income that comes under Section 10(13A) of the Act, the expenditure made by him would be deducted any sort of extra 10% expenditure made by him of his total income for the rent payment concerned with any filed or unfiled accommodation taken through him for the purposes of his own residence when these extra expenditure does not surpass Rs 5,000 per month or Rs 25,000 of his total income for the year, along with concerned with these conditions or limitations as might be defined, regard to the area where such accommodation is located and additional related concerns:

For taking the advantage of the mentioned above section the below conditions would require to get completed.

1. The taxpayer should be an individual.
2. That person could be a self-employed individual, performing as an employee and obtaining a salary.
3. As a salaried individual, he must not be qualified to obtain any House Rent Allowance (HRA) or Rent Free accommodation.
4. He files rent for his residential accommodation, for the fiscal Year.
5. Residential accommodation might be filed or not.
6. Under the definition of Relative u/s, 2(41) of the Act, no relative of that person must own any Residential Property or accommodation in that area where the person lives. Including the relatives.
   • Father / Mother
   • Mother’s Brother’s Wife / Husband’s Brother’s Wife
   • Husband’s Brother / Husband’s Sister
   • Mother’s Sister’s Husband / Mother’s Brother’s Wife
   • Brothers / Sisters
   • Spouse’s GrandFather / Spouse’s Mother
   • Son / Daughter
   • Spouse’s Father / Spouse’s Mother
   • Grand Son / Grand Daughter
   • Daughter’s Husband / Son’s Wife
   • Husband / Wife
   • Grandfather / Grandmother
   • Sister’s Husband / Brother’s wife
   • Father’s Brother / Father’s Brother’s Wife
   • Wife’s Brother / Wife’s Sister
   • Father’s Sister’s Husband / Brother’s Sister
   • Mother’s Brother / Mother’s Sister

• The rent furnished is in excess of 10% of his total income prior to permitting any deduction under the same section:
• The rent file for the accommodation having the intention of his own residence as per the conditions which the taxpayer furnishes the declaration in Form No 10BA (vide Rule 11B);
• The deduction is entitled to be claimed only for the case in which any residential accommodation would not be owned via taxpayer or through his spouse or minor child or by the HUF (Hindu Undivided Family) of which he is a member.

The amount of deduction will be a minimum of the subsequent amount.

• Rent paid – excess of 10% of adjusted total income,
• 25% of Adjusted total income,
• 5,000 per month.

Illustration

Mr. Shailesh Shah is 50 years and pays rent of Rs. 15,000 per month. His gross total income tax for the assessment year 2022-23 is Rs. 9,00,000 (Rs. 75,000 per month). What amount of deduction will be available to Mr. Shailesh u/s 80GG?

"Gross Total income Deduction u/s 80GG:"	-	Rs. 9,00,000
"Rent paid Rs.15,000 X 12"	Rs. 1,80,000	-
"10% of Rs.9,00,000"	Rs. 90,000	-
"Rent paid an extra"	Rs. 90,000	-
"25% of total Income Rs.9,00,000"	Rs. 2,25,000	-
"Ceiling Amount Rs. 5,000 X 12"	Rs. 60,000	-

"The least of the above is Rs. 60,000 is allowable as"

"deduction u/s 80GG"	Rs. 60,000	-
"Total Taxable Income"	Rs. 8,40,000	-

Thus, deduction under section 80GG available to Mr. Shailesh Shah shall be Rs. 60,000, since it is least of the above three amount.