Download Automated All in One TDS on Salary for Non-Govt (Private) Employees for F.Y.2017-18 & A.Y.2018-19 [ This Excel Utility can prepare at a time your Individual Tax Compute Sheet + Individual Salary Structure + Automatic H.R.A. Exemption U/s 10(13A) + Automatic Form 16 Part B + Automatic Form 16 Part A&B + Automatic Form 12 BA]
If you don’t get HRA
What if you don’t get HRA in your salary from your employer? Well, even if you don’t get such allowance, Income Tax Act has still got you covered. There is less known provision under the Act which allows employed individuals who do not get HRA to claim tax benefit. Section 80GG of the Income Tax Act, 1961 has provisions for such individuals to claim the tax deduction if the house to rent for their accommodation. To claim benefits under this section, one must satisfy the following conditions:
· The individual, who is an employee, should not receive HRA or any equivalent allowance from his employer as salary.
· The employee, his wife or his minor child should not have the ownership of the property where he resides.
· If the employee is part of a HUF, he or his family should not own the place of his residence.
· In case the employee owns a place other than his rented place of accommodation then he should not be claiming tax benefit on such property as self-occupied property. Such property would be deemed to be let-out.
Documents Required
· Employee needs to furnish documents like rent agreement and rent receipts.
· If your annual rental payment exceeds Rs. 1 lakh then you also need to furnish PAN details of your landlord.
· To claim deduction under section 80GG, he also needs to file Form 10BA. This form proves that the employee is not claiming the benefit of self-occupied property in any other location or the location where he is employed.
Amount of Deduction Available
Under section 80GG, you can claim least of the following as tax benefit:
· Rs. 60,000 per year (i.e. Rs. 5,000 per month)
· An amount equal to the total rent paid minus 10% of the total income
· 25% of adjusted total income of employee
So, the least of the above-mentioned amount is available as tax deduction irrespective of whether the house is furnished or semi-furnished.
Income Tax deduction under section 80GG is a less known and less claimed deduction. The main reason behind this is that most of the employers give HRA as part of the salary to their employees.
We can understand its calculation with the help of an example. Let’s assume that Mr. Arjun gets an annual salary of Rs. 3,00,000 after all deductions out of which he pays an annual rent of Rs. 1,50,000. In this case, the tax deduction allowed to him would be least of the following:-
· Rs. 5,000 per month i.e. Rs. 60,000 per annum
· Rent paid i.e. Rs. 1,50,000 minus 10% of total income i.e. Rs. 30,000 = Rs. 1,20,000
· 25% of total income i.e. Rs. 75,000
The least of the above can be claimed by him as a tax deduction. So, Rs. 60,000 would be allowed as a deduction under section 80GG for the complete Financial Year. Remember that filing Form 10BA is also needed to avail this deduction.