If you are a self employed businessman or professional or even a salaried person not in receipt of HRA, and paying high rentals for your residence, find out how you can still claim tax deductions on those monthly rentals and reduce your tax burden.

U/S 80GG of Income Tax Act, an assessee is allowed to subtract from his gross total income, a deduction in respect of rentals paid for any furnished/ unfurnished accommodation used for his residence. This is of course subject to certain conditions as nothing in Income Tax comes without its own set of riders. 🙂

The following conditions need to be fulfilled for availing 80GG deduction:

1. Assessee should be an Individual.

2. He should be Self Employed or Salaried employee not in receipt of HRA during the financial year

3. He or his spouse/ minor children/ HUF of which he is a member; should not own any residential accommodation in the city where he resides and carries on his employment or business.

4. If he or his spouse/ minor children/ HUF of which he is a member; own any residential accommodation in any other city, NO CONCESSION in respect of self occupied property u/s 23(2)(a) or 23(4)(a) should be claimed by him.

If all the above conditions are satisfied, this is what the assessee has to do:

1. File a declaration in Form 10BA regarding rentals paid by him.

2. Claim deduction in I.T. Return:

Deduction allowed is least of following

  • Rs. 2000 per month
  • 25% of adjusted Gross Total Income
  • Actual rent paid – 10% of  adjusted Gross Total Income

What is adjusted Gross Total Income?

Gross Total Income                                                                              xxxx

less. Long term Capital Gain                                                             xxxx

Less. Short Term Capital Gain u/s 111A                                     xxxx

less. Income u/s 115A or 115D                                                       xxxx

less. Deduction u/s 80C to 80U but not 80G                           xxxx

Adjusted Gross Total Income                                                         xxxx

 How to file Form No. 10BA?

No online filing is required, neither is it required to be attached anywhere with the Income tax return. However it is prudent to fill up and maintain record of such form. Submission is required only if your case is picked up by scrutiny by Income tax department.












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