Most salaried employees receive HRA and can claim a deduction for the same. When HRA is not allocated or if the taxpayer is self-employed, then the deduction can be claimed under section 80GG of the Income Tax Act, 1961, by filing form 10BA.
While there are a number of forms a taxpayer may be obligated to furnish, Form 10BA is filed to claim the deduction for the rent paid for rental property under section 80GG. The filing of the respective form is accomplished by submitting the required documents. Additionally, the taxpayer should also follow the step-by-step procedure in the e-filing portal to submit the Form. The following discussion would give a brief idea about the form and the filing formalities.
What is the Significance of Form 10BA?
Form 10BA is a statement to be recorded by a taxpayer who needs to maintain a tax deduction under Section 80GG for rent, settled on rental property. To claim the deduction under section 80RRB the following prerequisites have to be fulfilled:
- The taxpayer should not be getting House Rent Allowance from the respective employer
- The taxpayer’s spouse and minor children, or if the assessee is a part of HUF (Hindu Undivided Family), then the HUF should not hold any self-occupied living accommodation.
If the above requirements are met, then the taxpayer can present a statement in Form 10BA. It is imperative that a taxpayer should present the Form 10BA before filing ITR.
Meaning of Section 80GG of the Income Tax Act:
Section 80GG of the Income Tax Act, 1961 permits deductions provided certain conditions are met by the taxpayer as illustrated below:
- A deduction under Section 80GG can be claimed only by a self-governing person
- A person can be a salaried employee of some organization or can be self-employed
- If the taxpayer is a salaried employee, a deduction under this proviso can be claimed, if the taxpayer is not receiving any House Rent Allowance (HRA) from the employer
- The IT department holds the form 16 filing for the purpose of maintaining the results
- The taxpayer and the immediate family associated with the taxpayer like that of the spouse, minor children, or the HUF (Hindu Undivided Family) of which the taxpayer is a member, must not possess any degree of comfort for living in the place where the taxpayer is residing or working under employment or offering any kind of business or service
- The taxpayer should not possess any self-occupied residential property at any point in time.
For instance, consider the following scenario wherein the taxpayer was initially employed during the FY (Financial Year) 2019-20. The taxpayer, after 6 months, took to freelancing after quitting the job. While being employed, the HRA was availed by the taxpayer while not owning any self-governed residential property. Here, the said individual is eligible to claim a deduction under section 80GG and can file Form 10BA for the rent paid for the latter 6 months, as the taxpayer was neither receiving any allowance for paying the rent nor was possessing a self-occupied property.
Details Required for Filing Form 10BA:
The following details are crucial to the filing of Form 10BA:
- PAN card details of the taxpayer
- Name and Address of the rental property the taxpayer resides in
- Name and address details of the landlord
- Details pertaining to the rental amount that was paid.
Prerequisite Documents for Claiming Deduction Under Section 80GG:
- Rental agreement and rent receipts
- If the rental amount exceeds ₹ 10,000, PAN details of the owner of the residential property
- Form 10BA to show that the taxpayer has no self-occupied residence in the same or a different location.
Amount Eligible for Deduction Under Section 80GG:
The lowest of the amount stated below will be considered when a deduction is claimed under Section 80GG:
- ₹5,000 on a monthly basis
- 25% of the income in total (Not including the long-term and short-term capital gains, Also the income referred to here, is the one the taxpayer has in hand before the deduction is made under Section 80GG)
- The actual rent, when it is less than 10% of the income.
Procedure for filing Form 10BA:
Form 10BA has to be submitted online to the IT department from the e-filing account of the taxpayer. This can be accomplished through the following steps:
The taxpayer has to log in to the Income Tax e-filing portal by entering the Login credentials.
The user has to navigate to the tab e-file and select the option Income Tax Forms from the drop-down list.
The user has to select Form 10BA from the drop-down, and select the relevant Assessment Year. The user further has to select Submission Mode as Prepare and Submit Online and click Continue.
The user has to provide the details like the Name of the Landlord, Details of Rent Paid, etc and preview the form and submit it.
Details to be Filled in Form 10BA:
The following information is to be provided while filing the form 10BA:
- Name and PAN details of the taxpayer
- Address of the rental property
- Total Rent Paid
- Name and Address of the Landlord.
Most salaried employees receive HRA (House Rent Allowance) from their respective employers or organizations. Those employees who do not receive HRA or self-employed taxpayers who pay rent from their own pockets are eligible to claim a deduction under the stated provision. However, it is generally advised to furnish Form 10BA before the filing of Income Tax Returns under section 80U of the Income Tax Act, 1961: https://incometaxindia.gov.in/pages/acts/income-tax-act.aspx
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