A person is living in a house and paying rent for the same. If he gets House Rent Allowance (HRA) then he gets exemption u/s 10(13A). But if he does not get HRA then he can claim deduction u/s 80GG. The following conditions must be satisfied in order to claim deduction under this section-

• This deduction is allowed only to an Individual.
• The individual pays rent for his accommodation.
• The individual is either a self employed or if he is an employee he is not entitled to any HRA.
• 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 he works or carries on his business or profession.

Quantum of Deduction: Deduction shall be restricted to the least of the following –

• Rent less 10% of Adjusted Total Income
• 25% of Adjusted Total Income
• Rs. 2000 p.m.

For Instance; Mr. A, a business man submits the following particulars for the previous year 2010-2011. a)      Income from House Property at Kolkata – Rs. 30000 b)      Business Income – Rs. 40000 c)      Long Term Capital Gain – Rs. 30000 d)     Deduction u/s 80C – Rs. 12000 He pays Rs. 2000 p.m. as rent for his accommodation in Delhi. Neither, he nor his family owns any residential accommodation. Compute Total income for A.Y. 2011-2012. Solution:

  Note: Deduction u/s. 80GG shall be the minimum of the following three amounts –

•  Rent less 10% of Adjusted Total Income = Rs. 24,000 – 5,800 = Rs. 18,200
• 25% of Adjusted Total Income= Rs. 14,500
• Rs. 2000 p.m.= Rs. 240000

Adjusted Gross Total Income = GTI – LTCG – Deduction u/s 80C to 80U Except u/s 80GG = 1, 00,000 – 30,000-12,000 = Rs. 58,000