Deduction in respect of rent paid [Section 80GG] :
(i) This section provides for deduction in respect of rent paid.
(ii) The following conditions have to be satisfied for claiming deduction under section 80GG –
(1) The assessee should not be receiving any house rent allowance exempt under section 10(13A).
(2) The expenditure incurred by him on rent of any furnished or unfurnished accommodation should exceed 10% of his total income arrived at after all deductions under Chapter VI A except section 80GG.
(3) The accommodation should be occupied by the assessee for the purposes of his own residence.
(4) The assessee should fulfil such other conditions or limitations as may be prescribed, having regard to the area or place in which such accommodation is situated and other relevant considerations.
(5) The assessee or his spouse or his minor child or an HUF of which he is a member should not own any accommodation at the place where he ordinarily resides or perform duties of his office or employment or carries on his business or profession; or
(6) If the assessee owns any accommodation at any place other than that referred to above, such accommodation should not be in the occupation of the assessee and its annual value is not required to be determined under section 23(2)(a) or sect ion 23(4)(a).
(7) The assessee should file a declaration in the prescribed form, confirming the details of rent paid and fulfillment of other conditions, with the return of income.
(iii) The deduction admissible will be the least of the following:
(1) Actual rent paid minus 10% of the total income of the assessee before allowing the deduction, or
(2) 25% of such total income (arrived at after making all deductions under Chapter VI A but before making any deduction under this section), or
(3) Amount calculated at Rs 2,000 p.m.
Illustration
An assessee, whose total income is Rs 46,000, paid house rent at Rs 1,200 p.m. in respect of residential accommodation occupied by him at Mumbai. Compute the deduction allowable under section 80GG.
Solution
The deduction under section 80GG will be computed as follows:
(i) Actual rent less 10 per cent of total income
14,400 minus (10*46,000) / 100 = Rs 9,800(A)
(ii) 25 per cent of total income
25*46,000 / 100 = Rs 11,500(B)
(iii) Amount calculated at Rs 2,000 p.m.= Rs 24,000(C)
Deduction allowable (least of A, B and C) = Rs 9,800