Your taxes

I am a retired government employee and get pension. My husband stays in Chennai, in his own house. I live in Cuddalore, where I do not own a house. I am paying a monthly rent of ₹5,000. Can I claim tax rebate on the rent paid?

- Jaggani

As per section 80GG of the Income-Tax Act, 1961, where an assessee who is not employed or does not receive house rent allowance from his employer incurs expenditure on payment of rent, then he may claim deduction of rent paid, subject to fulfilment of conditions prescribed. Deduction available under Section 80GG of the Act is limited to the lower of the following:

- Expenditure incurred on rent, less 10 per cent of total income; or

- 25 per cent of total income;

- ₹2,000 per month (i.e. ₹24,000 per annum).

It is important to note that no deduction is available under Section 80GG if the rent incurred by the assessee pertains to the house owned by him, his spouse or minor child or by an HUF, of which such assessee is a member at a place where he ordinarily resides or performs duties of his office or carries on his business of profession. It is also not available in case the assessee owns a self-occupied house at any other place whose annual value is nil.

Since you live in a rented accommodation and fulfil the above conditions, you will be able to claim a deduction on rent paid from your taxable income.

Is the PAN number of the landlord necessary for claiming tax benefits on rent paid? Please clarify on the CBDT’s October 2013 circular in this regard.

- V Arunachalam

As per Circular No. 8 dated October 10, 2013, issued by the Central Board of Direct Taxes, if the annual rent paid by the employee exceeds ₹1 lakh, it is mandatory for the employee to report PAN of the landlord to the employer for the purpose of claiming deduction with respect to House Rent Allowance along with other documents prescribed. In case the landlord does not have a PAN, a declaration from the landlord along with the name and address of the landlord should be filed by you with the employer. In either of the scenarios, the employer shall give the tax benefit of House Rent Allowance.

Is the deduction of ₹10,000 on savings bank account interest available for the AY2014-15 as well?

- Mahesh

The section 80TTA was inserted by the Finance Act, 2012, w.e.f. April 1, 2013, wherein deduction up to ₹10,000 is allowed on the interest earned on the deposits in a savings bank account. There were no changes made to this section in the Finance Act, 2013. Therefore, you will be eligible to claim the deduction under Section 80TTA for the AY2014-15 also.

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