HRA, House Rent Allowance: This exemption is decided on the basis of your annual income and rent. Let us know what are the ways to get tax exemption under section 80GG and the important things related to it.
HRA: If you live in a rented house and your salary does not include HRA i.e. House Rent Allowance, then there is nothing to worry about. Under section 80GG of the Income Tax Act, you can claim tax exemption on rent. This provision is specially made for those salaried and self-employed people, whose income does not have any part of HRA. However, some important conditions have to be fulfilled to claim this exemption. This exemption is decided on the basis of your annual income and rent.
Let us know what are the ways to get tax exemption under section 80GG and the important things related to it.
How to get the benefit of section 80GG?
The first condition to claim this exemption is that your salary should not include the part of HRA. If HRA is given in your salary, then you cannot claim tax exemption under this section. The second condition is that you are living in the house for which the rent is being paid. This exemption will not apply to the rent of any office or other place. Apart from this, there should not be any property in your name, your spouse or minor children’s name in the city where you live or work.
It is mandatory to fill Form 10BA in this process. This form has to be submitted on the Income Tax portal, in which it has to be declared that you fulfill all the conditions of Section 80GG. It is also important to keep in mind that the information given in the form is completely correct, so that any kind of trouble can be avoided.
How much exemption will be available?
- Under Section 80GG, you can claim tax exemption on the lowest of these amounts:
- Rs 5,000 per month (up to Rs 60,000 annually).
- 25% of your Adjusted Gross Income (AGI).
- Annual rent – 10% of AGI.
Keep these things in mind:
- The maximum exemption is limited to Rs 60,000.
- Keep documents like rent receipt, rent agreement and bank statement safe.
- Fill the form correctly and include deductions in tax filing.
- Overall, you can save tax on rent even without HRA. Provided you understand the rules of Section 80GG and improve your tax planning.
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