Income Tax Returns Filing: Can Non-Salaried Persons Claim House Rent Allowance?

Salaried employees or self-employed ones not getting HRA can claim a deduction up to the lower of Rs 5000 per month or 25 per cent of total income or actual rent paid in excess of 10 per cent of total income.

New Delhi: While filing Income Tax Returns (ITR) House Rent Allowance (HRA) exemption is claimed by salaried taxpayers against the actual rent paid by them subject to certain conditions. Can non-salaried persons living in a rented house claim tax benefits? As per experts, small tax relief against rent paid is available to non-salaried as well as salaried employees who are not getting HRA.

Section 80GG under Chapter VI-A of the IT Act is specially designed to provide tax relief for self-employed individuals and salaried employees, who do not avail HRA, as per Dr Suresh Surana, Founder, RSM India, reported the Financial Express. However, certain conditions have to be fulfilled:

• The taxpayer, his/her minor child, spouse, or ​​​Hindu Undivided Family (HUF) of which the taxpayer is a member, shall not own any residential accommodation where the individual performs office duties, or employment or carries on business or profession.
• The individual shall be required to file Form 10BA with details of rent payment.

Under section 80GG of the Income-Tax Act, taxpayers who are self-employed, can claim a deduction for rent paid to landlords, said Aarti Raote, Partner at Deloitte India, reported FE. It said that even salaried taxpayers who do not receive HRA from employers can claim a deduction under this section.

How Much Deduction Is Allowed?

Salaried employees or self-employed ones not getting HRA can claim a deduction up to the lower of Rs 5000 per month or 25 per cent of total income or actual rent paid in excess of 10 per cent of total income, as per the report.

“The deduction can be claimed only by a person who incurs rental expenses and he does not own any house. Further, his spouse or minor child or his HUF also should own any residential accommodation at a place where he ordinarily resides. The taxpayer would need to file a declaration in Form 10BA,” said Raote.

Tax experts also say that the deduction of HRA and deduction under section 80GG are mutually exclusive, which means that only one can be claimed by taxpayers.