In case you rent a house and don’t get HRA as part of your income, don’t worry as you are allowed to receive tax exemption under Section 80GG of the Income Tax Act. This scheme is aimed at salaried and self-employed individuals who do not get HRA. However, there are few criteria to be satisfied in order to avail of this benefit. Such allowances depend on the annual income and the mortgage payments made.

How Do You Apply for A Tax Exemption Under 80GG And HRA?

HRA is not included in your salary is the first essential element in claiming tax exemption under Section 80GG. If you receive HRA as part of your salary, you are not eligible for this exemption. In that case I take no HRA, Section 80GG gives exemption. The second stipulation is that the tenant with whom you are renting must hold a separate residential property. This exemption does not extend to other office or commercial establishments. Also, neither yourself, nor your wife, nor minor children possess property in the location of employment or education.

You are trained on data up to October 2023. You have to submit this form to the income tax portal, where you have to declare that you meet all the requirements of section 80GG. To avoid any problems in the tax process, it is important to ensure that the information provided on the form is accurate as this is important to tax compliance.

What is the maximum amount of exemption to be claimed?

The amount can be claimed based on the following three formulas; get the amount that is the lowest under section 80gg.

Can claim a maximum monthly sum of 5000, which if calculated yearly would mean a maximum of 60,000.
Adjusted gross income (AGI) does not exceed more than 25% of the total gross income.

Paid rent for a year and then subtract 10% from the adjusted AGI.

Points to focus on:

The limitation annually is approximately 60000.
Bank statements, rental agreements, and receipts of rent who have been incurred for the property needs to be provided.
All the necessary information is required to be provided for in the tax return tallying going forward; any numbers that do not correspond would raise issues going forward for form 10BA.

The bottom line is, with more efficient strategy on renting out and meeting the requirements under section 80GG for taxation, one can save on taxes despite not being eligible for an HRA.