Various components of an employee’s salary structure can contribute to decreasing their tax burden. One such component, the HRA, can come in handy by making an employee eligible for tax benefits. However, not everyone has HRA as a part of their salary. In such cases, Section 80GG comes in.
If you are an employee, HRA (House Rent Allowance) would generally be an important part of your salary structure. However, if you do not receive any House Rent Allowance (henceforth referred to as HRA), and if you are staying in a house on rent, you can apply for tax deductions under section 80GG of the Income Tax Act.
By deductions, it is meant that you can deduct tax from your gross pay of the current year to infer at the net taxable salary on which the income tax would be charged.
There are a few conditions that you have to meet to qualify for the tax deductions under Section 80GG. Here are those conditions:
Self-employed individuals can claim deductions under this section. Salaried individuals who do not receive HRA as part of their salary are also eligible to claim such deductions.
Organizations cannot claim deductions under 80GG for their rental costs
You are eligible to claim this deduction if you are a part of Hindu Undivided Family
Under 80GG, you can claim deductions if you a tenant residing in any furnished, semi-furnished or unfurnished house
If you have claimed income tax deduction under any similar sections, you cannot avail of the benefits of Section 80GG.
Here are a few eligibility criteria that must be met while applying for 80GG deductions:
You must be salaried/self-employed
You must not receive HRA as a part of your salary
You must have submitted a declaration through Form 10BA
To claim deductions under 80GG, you must follow the steps given below:
File form 10BA online. Here’s how:
Log in with your username and password at the website: https://incometaxindiaefiling.gov.in/
Select ‘Income Tax forms’ on the tab ‘e-file’. It will look like this:
Source: https://incometaxindiaefiling.gov.in/
Select From 10BA from the first dropdown. This screen would appear:
Source: https://incometaxindiaefiling.gov.in/
Select the assessment year for which you are filling the form
Click ‘prepare and submit online’ from the dropdown list
The complete form will now appear. You can fill in the relevant details after perusing the guidelines given in the blue tab.
In case your rent exceeds ₹1 lakh, you must fill in the PAN details of the owner of the property you are renting out.
Now let’s have a look at certain exceptions under section 80GG:
You cannot be the owner of a property (residential) at the place where you normally reside or carry out work
You would not be able to avail of deductions in the event that you are already claiming deductions on residential property owned in a separate location. If you are residing in a city and own a property or house in another city, you cannot claim HRA deductions.
You can claim the least amount among any of the following:
25% of your annual income
₹5000 per month/ ₹60,000 per year
Total rent paid after deducting 10% of basic salary
Section 80GG is an easy and effective way to get income tax deduction. However, the deductions might, at times, fall short of reducing your complete tax burden. In such cases, you can opt to invest in various financial products that will help you avail of deductions under other sections of the ITA.
If you are looking to get additional tax deductions, you can simply purchase a product like Bajaj Allianz ULIPs (Unit Linked Insurance Plans) on Finserv MARKETS. The principal investment amount, the income derived and maturity proceeds are all tax-free. Other than the tax savings, this plan helps you build a substantial corpus over the years. ULIPs available on Finserv MARKETS provides you with double advantages wherein a part of your premium is paid towards life coverage while the remaining is utilized for putting resources into assets of your choice. You can choose from three different plans: Investment Plans, Retirement Plans or Child Plans. Invest in ULIPs on Finserv MARKETS now to avail of these benefits!
I am passionate about the vehicle I drive and hence I wan't to protect it with the best available option. What amazed me about Bajaj Finserv Markets was full transparency, quick quotes and the attractive discount on the premium while choosing annual payment option!
My husband and I will finally move into our own house this Diwali. All thanks to Bajaj Finserv – Markets, with competitive interest rates, minimal processing fees and easy to repay EMIs, our dream saw the light of reality in no time!
Kids grow up fast and to fulfill their dream trip to Disneyland I had everything but instant funds. With no collateral or guarantor required and a hassle-free processing, I gifted my family a memorable trip to Paris just at the click of a mouse!
The best way to start looking for health insurance is not a 60 minute meeting with an insurance sales person but with a close study of my coverage needs and checking the insurance company's claim ratio. No unnecessary jargons, easy to apply claims process and choice of premiums, what else could I have asked for as a newbie!
I bought my first iPhone using my Bajaj Finserv EMI Network Card. Zero downpayment, No cost EMI on Bajaj Finserv Markets EMI store and the smile on my dad's face just made my day!
Getting a loan to take care of my wedding and relieving my parents to enjoy the occasion was the best decision I ever made. Easy-to-apply, amazing interest rate and quick disbursal, what more can one ask for!