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?
Most companies pay house rent allowance (HRA) to their employees as part of the cost to company structure. This amount is exempted under Section 10(13A) of the Income Tax Act. However, there are certain conditions attached to it. However, what if your employer does not provide HRA at all?
Also, if you are a self-employed professional and do not have the facility to avail this HRA exemption, what should you do? Such taxpayers are exempted under Section 80GG of the Income Tax Act. You can avail this exemption under Section 80GG while filing your return.
What is Section 80GG?
This section allows you to avail tax exemption on rent paid in the relevant financial year. This deduction will be decided 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 annum)
– 25% of total income
– 10% of total income after deducting actual rent paid
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 exemption
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 needs. You have to give all the information in your ITR form and also fill the 10BA form. In this form, you will have to fill your name, PAN number, Aadhaar, address, rent period, landlord’s property details etc.
