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Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
ARN. No. KLI/23-24/E-BB/1201
Features
Ref. No. KLI/22-23/E-BB/999
Section 80GG enables taxpayers to claim deductions for rent paid, offering relief for accommodation expenses under the Income Tax Act.
As per the Income Tax Act of 1961, Section 80GG stands out as a crucial provision that extends a helping hand to individuals who bear the financial brunt of renting a home.
Section of the Income Tax Act 1961 provides a pathway for taxpayers who do not receive House Rent Allowance (HRA) from their employers to claim deductions for the rent they pay.
Section 80GG is a provision within the Income Tax Act that permits a taxpayer or assessee to seek a deduction for the rent expended on their dwelling. This deduction applies to both salaried and self-employed individuals, including those with no income. By leveraging this provision, individuals can effectively decrease their overall tax obligations.
Individuals eligible for a Section 80GG tax deduction are those who pay rent for their residence but do not receive any House Rent Allowance (HRA) from their employer. However, certain conditions need to be met:
The deduction amount under Section 80GG is determined based on the following criteria:
Section 80GG of the Income Tax Act 1961 extends a helping hand to individuals who shoulder the weight of rental expenses, offering them a pathway to mitigate their tax liabilities. Some of its advantages are as follows:
Under Section 80GG, individuals who do not receive HRA from their employers can claim tax deductions for the rent paid. This deduction is permissible if the taxpayer or their spouse or minor child does not own any residential accommodation at the location where they currently reside or perform employment duties. Such individuals can claim the least of the following amounts as a deduction:
One of the key advantages of Section 80GG is its flexibility concerning the location of the rented accommodation. Unlike HRA exemptions, which are contingent upon the place of employment, Section 80GG allows taxpayers to claim deductions for rent paid irrespective of their workplace location. This flexibility empowers individuals to choose their place of residence based on personal preferences or other factors without compromising their tax benefits.
Unlike HRA exemptions, which primarily benefit salaried individuals, Section 80GG also extends its benefits to self-employed individuals. Whether one is a salaried employee, a freelancer, or a business owner, as long as they fulfill the eligibility criteria, they can avail themselves of the tax benefits provided under Section 80GG. This inclusivity ensures that a broader spectrum of taxpayers can benefit from the deduction, promoting equity and fairness in the tax system.
Section 80GG operates independently of other tax-saving investments or deductions. Therefore, individuals can avail themselves of this deduction in addition to other deductions available under sections such as 80C, 80D, or 80G. This versatility allows taxpayers to optimize their tax planning strategies by leveraging multiple avenues to reduce their tax liabilities effectively.
Section 80GG incentivizes individuals to opt for rental housing by providing tax relief on rental expenses, thereby stimulating the rental real estate market. This encouragement addresses the housing needs of individuals who cannot afford a property and contributes to the overall growth and development of the rental housing sector.
To avail of a deduction under Section 80GG, individuals must complete Form 10BA and submit it with their income tax return.
The following details are essential when filling out the form:
Section 80GG serves as a critical component of India’s tax framework, offering a lifeline to individuals renting a home without the help of HRA. The tax relief provided by this section not only eases the financial burden on renters but also encourages the growth of the rental housing sector.
As individuals go through tax regulations, Section 80GG acts as the government’s commitment to providing inclusive solutions that fulfill the needs of its citizens. For people living on rent, it is a means of availing financial benefits and optimizing their tax deductions.
1. How to Calculate HRA in Salary?
2. Types of Allowances in India: Taxable and Non-Taxable Allowance
Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
ARN. No. KLI/23-24/E-BB/1201
Features
Ref. No. KLI/22-23/E-BB/999
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.