Essential conditions for claiming deduction under this section:
(1) This deduction is allowed to an individual.
(2) The individual should pay rent for his residential accommodation, whether furnished or unfurnished.
(3) The individual is either a self-employed person or if he is an employee, he is neither entitled to any house rent allowance nor a rent-free accommodation.
(4) The individual, his or her spouse or minor child or a HUF of which he/she is a member, does not own any residential accommodation at the place where such an assessee ordinarily resides or at the place where he works or carries on his business or profession.
If the assessee i.e. the individual owns any residential accommodation at any place, other than the place of residence or work of the assessee, then such property should not be assessed in the hands of the individual as self-occupied property.
(5) Such individual should fulfill such other conditions or limitations as may be prescribed, having regard to the area or place in which such accommodation is situated and other relevant considerations.
The assessee must file a declaration in Form No. 10BA alongwith the return of income to claim deduction under section 80GG.
Quantum of Deduction U/s 80GG:
The deduction shall be the minimum of the following amounts:
(i) Excess of rent paid over 10% of ‘Adjusted Total income’ ;
(ii) 25% of the ‘Adjusted Total Income”;
(iii) Rs. 5,000 per month.
Adjusted Total Income U/s 80GG:
Adjusted Total Income, for this purpose, means the “Gross Total Income” as reduced by:
(i) long-term capital gains if any, which have been included in the “Gross Total Income”;
(ii) short-term capital gains of the nature referred to in section lIlA (i.e. short-term capital gain on transfer of shares through a recognised stock exchange which are taxable @ 15%);
(iii) all deductions permissible ulss 80C to 80U excepting deduction under this section i.e. section
(iv) income referred to in section 115A, 115AB, 115AC or 115AD. These sections relate to incomes of NRIs and foreign companies etc. which are taxable at special rate of tax.