Is there is deduction for payment of rent by salaried individual under Income Tax.

Question BankCategory: Income TaxIs there is deduction for payment of rent by salaried individual under Income Tax.
Anand asked 1 month ago

Is there is deduction for payment of rent by salaried individual under Income Tax.
Salaried person and paying Rent for the flat. I am receiving salary 50000 but paying rent to 8000 but still I am paying tax on 50000. Is this correct. Why not tax applicable on 42000 i.e. salary after deducting rent. As I living in delhi away from my hometown and net salary come to my hand is only 42000 then why tax is deducted on 50000. What to do.?

1 Answers
Ashu answered 1 month ago

IN case a person is living on rent then he must check conditions of section 80GG of Income tax act. Under section 80GG, a person can claim deduction in respect of rent paid by him if he fulfill certain conditions given below:-
Section 80GG: Deduction of Rent Paid. 
Conditions of claiming deductions of rent paid under section 80GG are:-

  1. You are self-employed or salaried
  2. You have not received HRA at any time during the year.
  3. You or your spouse or your minor child or HUF of which you are a member – do not own any residential accommodation at the place where you currently reside, perform duties of the office, or employment or carry on business or profession.
  4. In case you own any residential property at any place, for which your Income from house property is calculated under applicable sections (as a self-occupied property), no deduction under section 80GG is allowed. (Logic:- How can you self occupy a residential property at any other place while you are living on rent at some other place. If it is so then deduction under section 80GG is not allowed.)

Quantum of Deduction for Rent paid under section 8GG
Least  of the following will be considered as value of the deduction under this section-
(a)    Rs 5,000 per month
(b)   25% of the total Income (excluding long-term capital gains, short-term capital gains under section 111A and Income under Section 115A or 115D and deductions under 80C to 80U. Also, income is before making a deduction under section 80GG).
(c)    Actual rent less 10% of Income.
How to claim deduction under section 80GG for rent paid.
If all conditions of section 80GG are satisfied then assess can claim this deduction in his ITR and he has to file form 10BA with detail of payment of Rent. 

Your Answer