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Salaried employees can’t claim deduction under Section 80GG on rent paid who get HRA

Salaried employees can’t claim deduction under Section 80GG on rent paid who get HRA

(Source: Livemint)
  • Deduction under Section 80GG is available only to those employees who do not get HRA or to self-employed persons
  • The deduction limit under the section is ₹60,000 per year

HRAHouse Rent AllowanceRent

The income tax department recently sent notices to a number of salaried employees for claiming deduction for rent paid under Section 80GG of the Income-tax Act, 1961, even though they were receiving house rent allowance (HRA) from their employers.

When it’s available
Deduction under Section 80GG is available only to those employees who do not get HRA (for instance, because they work in very small firms or in the informal sector) or to self-employed persons. The deduction limit under the section is ₹60,000 per year.

When it’s not
Section 80GG is not available to a person who owns a house but lives in a rented house in the same city. For example, if you own a house in Mumbai but choose to stay in a rented accommodation in the same city, you won’t get the benefit under Section 80GG.

Similarly, the benefit is not available to a person who owns a house in another city, and claims tax benefit, such as tax deduction under Section 24(b) for home loan interest, for that house.

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