Can non-salaried persons claim deduction against rent paid to a landlord while filing ITR?

Salaried taxpayers are allowed to claim House Rent Allowance (HRA) exemption against the actual rent paid by them subject to certain conditions. But, is there any such Income Tax provision for tax deduction benefits to non-salaried persons living in a rented house? FE PF Desk connected with some tax experts for the answer to this query. Read on to find out what they say.

Experts say that small tax relief against rent paid is available to non-salaried as well as salaried employees who are not getting HRA.

According to Dr Suresh Surana, Founder, RSM India, Section 80GG under Chapter VI-A of the IT Act is specially designed to provide tax relief for self-employed individuals and salaried employees, who do not avail HRA. However, the relief is subject to the fulfilment of the following conditions.

  • The taxpayer, his/her spouse, minor child or HUF of which the taxpayer is a member, shall not own any residential accommodation where the individual performs office duties, or employment or carries on business or profession.
  • The assessee shall be required to file Form 10BA with details of the payment of rent.

Aarti Raote, Partner at Deloitte India, also says that taxpayers, who are self-employed, can claim a deduction for rent paid to landlords under section 80GG of the Income-tax Act. Even salaried taxpayers who do not receive HRA from employers can claim a deduction under this section.

How much deduction is allowed?

According to Raote, the deduction for self-employed or salaried employees not getting HRA is restricted to the lower of Rs 5000 per month or 25% of total income or actual rent paid in excess of 10% of total income.

“The deduction can be claimed only by a person who incurs rental expenses and he does not own any house. Further, his spouse or minor child or his HUF also should own any residential accommodation at a place where he ordinarily resides. The taxpayer would need to file a declaration in Form 10BA,” said Raote.

Tax experts also say that the deduction of HRA and deduction under section 80GG are mutually exclusive, which means that only one can be claimed by taxpayers.

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