Tax Deductions for Rent Paid in 2024
Tax Deductions for Rent Paid in 2024: A Comprehensive Guide
Rent paid by salaried individuals can significantly reduce their taxable income. However, understanding the specific tax deductions available and the eligibility criteria is essential to maximize savings.
Section 80GG: Deduction for House Rent Allowance (HRA)
For individuals receiving HRA from their employer, the deduction is calculated based on the least of the following:
Actual HRA received: The amount of HRA received from the employer.
40% of basic salary + dearness allowance: This is calculated based on the individual's basic salary and dearness allowance.
Actual rent paid minus 10% of basic salary + dearness allowance: This is applicable only if the individual is living in a metro city.
If you do not receive HRA from your employer, you can claim a deduction under Section 80GG. This deduction is available for individuals who are not staying in their own house property. The maximum deduction allowed under Section 80GG varies based on the city where you reside.
Section 80D: Deduction for Medical Insurance Premiums
You can claim a deduction for medical insurance premiums paid for yourself, your spouse, and your dependent children. The maximum deduction allowed under Section 80D is ₹50,000 for individuals and ₹25,000 for senior citizens.
If you have a senior citizen parent, you can claim an additional deduction of ₹50,000 for medical insurance premiums paid for them.
Other Deductions
Section 80C: This section covers a wide range of investments, including life insurance premiums, PPF, and ELSS. The maximum deduction allowed under Section 80C is ₹1.5 lakh.
Section 80E: Deduction for interest paid on education loan.
Section 80TTA: Deduction for interest earned on savings bank accounts up to ₹10,000.
Important points to note:
Proof of rent payment: You will need to provide proof of rent payment, such as rent receipts or rent agreements, to claim the deduction.
Rent agreement: It is advisable to have a rent agreement in place to avoid any disputes and to provide evidence of rent payment.
PAN card: The PAN card of the landlord must be mentioned on the rent receipt.
Rent paid to a relative: If you are paying rent to a relative, additional documents might be required to prove that the relationship is genuine and that the rent paid is at a fair market value.
By understanding these tax deductions and planning your finances accordingly, you can significantly reduce your taxable income and save more money. It is always recommended to consult with a tax expert for personalised advice.
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