(Section 80GG/80TTA/80TTB)
DEDUCTION IN RESPECT OF RENT PAID AND INTEREST INCOME

Section 80GG: Deduction for Rent paid

Section 80GG allows an individual to claim a deduction on the rent that is paid towards their residential accommodation. Deduction can be claimed on any kind of residential property which is unfurnished, furnished, or even semi-furnished. Only individual can claim deduction companies not allowed for deduction under this section.

Amount of deduction
The deduction shall be the minimum of the following amounts

• Excess of rent paid over 10% of Adjusted Total Income'
• 25% of the "Adjusted Total Income"
• Rs. 5,000 per month i.e Rs. 60,000 PA

Adjusted total income means Gross total income after reducing

• LTCG if any, included in gross total income
• STCG u/s 111A
• All deductions u/s 80C to 80U except deduction under this section
• Incomes of NRIs and foreign companies are taxed at a special tax rate, such as incomes u/s 115A, 115AB, 115AC, or 115AD.

Conditions In order to claiming tax deduction under this section following conditions need to be satisfied

i) One can claim a deduction under this section if he or she is self-employed or salaried person not having the HRA component in their CTC.

ii) A person should be lives in a rented residential house.

iii) You, your spouse, your minor child, or the HUF of which you are a member – do not own any residential accommodation where you currently reside, perform office duties, or work or carry on business or profession.

iv) No benefit under section 80GG will be allowed if you are the owner of a house in the city or the town where you are employed or doing your business (self-employment). If the Assessee i.e the individual owns any Reasonable Accomodation 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.

v) Besides these assets, any other property you own would be called a capital asset, like land, building, shares, patents, trademarks, jewelry, etc.

vi) Form 10BA - is required to be filled with details of payment of rent to claim deduction under section 80GG.  

What is Form 10BA  - Form 10BA is the declaration required to be submitted while claiming benefits under section 80GG. It is a declaration that the persons lives in a rented house during the relevant period and have no other residence.

Examples - Mr. A having adjusted total income of Rs. 5 lakh p.a. lives in Mumbai in a rented apartment and pays a rent of Rs. 15000 per month. So, his total rent per year is Rs. 180000.

 Now, as per the above-mentioned criteria, the three possibilities can be –

Rs. 60000 annually
25% of 500000 = Rs.125000
180000- (10% of 500000) = Rs. 130000

So, the least of these three amounts is Rs. 60000 that means Mr. A can claim and get a deduction of Rs. 60000 per year on the gross total income for the rent he pays.

Section 80TTA: Deduction for Interest on Saving Account

Section 80TTA allows a deduction in respect of income from interest on deposits held in saving accounts with a Bank or a Co-operative society. However, the deduction is available only to an individual or a Hindu Undivided Family. Trusts and Companies are not eligible to claim this deduction under section 80TTA also no deduction for fixed deposit interest available in this.

Amount of deduction Rs.10,000 - deductions are allowed u/s 80TTA on the interest earned from the savings account. If a person has multiple savings accounts with different banks, then the maximum deduction that can be claimed for all savings accounts put together is Rs. 10,000/-.

Section 80TTB: Tax Deduction for Senior Citizens on Interest Income

This section provides right to senior citizens to claim a larger deduction of Rs 50,000 on the interest income earned on deposits (saving or fixed). This Section acts like an up-grade of the Section 80TTA, as the threshold limit of the tax deduction on interest income was raised from INR 10,000 to INR 50,000 to senior citizens.

As per the Income Tax Act, a “senior citizen” is one who is resident individual of age 60 years or above at any time in the relevant financial year. As per this newly introduced section, any senior citizen as a resident individual in India can claim a deduction of up to Rs 50,000 from the interest income earned on deposits (saving or fixed) during the concerned financial year.

Note :  if an individual opts for the New Tax Regime, the deduction under Section 80GG/ 80TTA/80TTB will not be claimable.

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