Most companies pay House Rent Allowance (HRA) to their employees under the Cost to Company structure. This amount is exempted under Section 10(13A) of the Income Tax Act. However, there are some conditions attached to it. However, what if your employer does not pay HRA at all?
Apart from this, if you are a self-employed professional and you do not have the facility to get this HRA exemption, then what should you do? For such taxpayers, exemption has been given under section 80GG of Income Tax. You can avail this exemption under section 80GG while filing the return.
What is Section 80GG?
This section allows you to avail tax exemption on the rent paid in the relevant financial year. The deduction will be determined based on the following options i.e. the lowest of the following amounts will be eligible for exemption:
– Rs 5,000 per month (Rs 60,000 per year)
25% of total income
Also Read: Cash Rules: How much cash can you keep at home? Know these important rules or else you may face Income Tax raid
– Actual rent paid after deducting 10% of the total income
Here ‘total income’ does not include long term capital gains and short term capital gains under section 111A. However, you will not get this facility if you or your spouse own the house where you live or carry out your business activities. Also, like HRA, this tax exemption is available only under the old tax regime. This facility is not available in the new tax regime.
How to get this discount
You can claim this exemption while filing income tax return. You do not have to provide rent agreement or rent receipt as proof, but you have to keep these documents safe for future use. You have to give all the information in your ITR form and apart from this, you have to fill 10BA form. In this form, you have to fill your name, PAN number, Aadhaar, address, rent period, landlord’s property details etc.
