Employees Can Get A Tax Deduction On Rent Without HRA, Know What Are The Conditions

Employees working in a company can also get a tax deduction on rented accommodation without HRA. The exemption can be claimed on house rent paid under section 80GG of the Income Tax Act.

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For employees working in most companies, house rent allowance is considered as part of their salary. The provision for claiming a deduction on house rent paid to employees was introduced in the Income Tax Act 1961. At the same time, such employees can claim exemption on house rent paid under section 80GG of the Income Tax Act. Also, this rule applies to the self-employed, but it is necessary to understand some terms and conditions to get the benefit of exemption. For example, an employee should not have received HRA during the financial year to claim deduction under section 80GG.

In this regard, Delhi-based Chartered Accountant Tarun Kumar said that a taxpayer claiming exemption in HRA cannot claim deduction on rent paid under section 80GG. Also, the person claiming deduction under section 80GG should not have any house in the city. In fact, in a city where the office or business is located, there should be no house in the name of spouse, minor child, or Hindu undivided family. On the other hand, if an employee has a house in the city where he works, then he will not be able to claim the deduction.

Who can get permission for deduction?

The deduction is allowed to a person who has a house in a different city from the city of his business. Bengaluru-based chartered accountant Prakash Hegde said the ban applies only to the city where the person is employed. Whereas a person can own property in another city.

How to get deduction Success Benefit?

The taxpayer will have to file a Form 10BA, after which he will be able to claim this deduction. At the same time, the taxpayer who has opted for an alternative or new tax regime will not be able to claim this deduction. It is assumed that the deduction is to be calculated based on a single formula.