SECTION 80GG l PAYMENT OF RENT
545. Whether, for the purposes of computing
deduction under the section, total income would be total income of assessee
after allowing all deductions except deduction under this section
1. Section 80GG provides for grant of a deduction
in respect of any expenditure incurred by an assessee in excess of 10 per cent
of his total income towards payment of rent (by whatever name called), to the
extent to which such excess expenditure does not exceed Rs. 300 p.m. or 15 per
cent of the total income of the assessee for the year1, whichever is less and subject to such other
conditions as may be prescribed. Rule 11B of the Income-tax Rules prescribes
the places in the country where the accommodation should be situated.
2. Two important conditions which should be
satisfied before an assessee is entitled to deduction under section 80GG are :
a. the
assessee should not be in receipt of any house rent allowance which may be
entitled to exemption under section 10(13A); and
b. the
assessee or his spouse or minor child or where the assessee is a member of a
HUF, the HUF itself should not own any residential accommodation whatsoever.
3. The Explanation to section 80GG provides that the term ‘total
income’ should be taken to represent the assessee’s total income before allowing
deduction for any expenditure under section 80GG itself.
4. The Board has been receiving a large number of references on the true
meaning of the Explanation. In
order to arrive at the base of the total income with reference to which the
amount of admissible deduction is to be calculated, it is clarified that the total
income would be the total income of the assessee after allowing all
deductions except the one provided under section 80GG itself. To
illustrate, if an assessee is a salaried employee, the total income for the
purposes of section 80GG will be arrived at after allowing the standard
deduction under section 16(i) and the deduction under section 80G, etc.
Circular
: No. 327 [F. No. 200/54/81-IT(A-I)], dated
8-2-1982.