Form 10BA is the most essential requirement to claim the house rent deduction under Section 80GG. However, you must not be receiving HRA (House Rent Allowances) from your employer. This allows the potential taxpayers to reduce their taxable income and overall tax liabilities.
The Form no 10BA of the Income Tax Act may seem a little complex, but it is not. Instead, you can easily file the 10BA form by understanding certain basics, including what the 10BA form is, how to file form 10BA, its applicability, and how you can download it. Read this guide to understand everything you should know about the 10BA form.
Without any delay, let’s begin!
What is Form 10BA in Income Tax?
Form 10BA refers to a declaration form prescribed under Section 80GG of the Income Tax Department Act, 1961, allowing taxpayers to claim a deduction over the payment of rent for residential accommodation. To claim the 80GG deduction, you must not receive any HRA (Home Rent Allowance) from your respective employer, and you, your spouse, or even your children shouldn’t have any owned property in the same city.
Property over the parent’s name can also allow you to claim the 80GG benefits. However, there must be a rental agreement, and the rental amount paid to the parents will be taxable while filing an ITR (Income Tax Return). Claiming the deduction benefits the taxpayer to reduce their taxable income. Ensure that you submit the 10BA form before filing your ITRs (Income Tax Returns).
Considering the recent year, you need to mandatorily submit the form before July 31, 2024. However, if book audits are essential, then deadlines for filing the returns can even be extended up to September 30, 2024. Submitting the form on time allows you to gain the benefits of deductions and compliance with tax regulations. To file the form, you can either approach your HR manager at a nearby tax office or even download form no 10BA from the official government.
Eligibility Criteria to Claim Tax Deduction Under Section 80GG
To be eligible for an 80GG deduction, you must meet certain criteria mentioned below.
1.Individuals or HUF (Hindu Undivided Family) can only claim this deduction, not businesses or enterprises.
2. Only salaried or self-employed professionals are liable to claim the deduction u/a 80GG. In other words, any person paying rent without having any income source won’t be able to claim the deduction.
3. Professionals looking to claim this deduction must submit form no 10BA to the tax authorities before filing the ITR. This form serves as a declaration that the applicant or his spouse/minor child doesn’t have any owned property within the same city.
4. Individuals claiming an 80GG deduction must not receive the HRA from their employer. It will be considered for the entire year. Thus, you shouldn’t have claimed the HRA from your previous employer.
5. For the people whose rent exceeds the INR 1 lakh amount, it is essential to attach the homeowner’s PAN card to be eligible for claiming the deduction.
6. Individuals residing over the parent’s property can also claim the deduction u/s 80GG. However, you will be required to have a legal rental agreement, and your parents need to mention the taxes within their ITR.
7. Non-resident Indians are also eligible to take advantage of this deduction. However, they are required to be paying the rent for a property in India.
Is It Mandatory to File Form 10BA Before Filing ITR?
Yes, it is mandatory to file form 10BA before filing ITR if you want to claim the deduction for rent remunerated under Section 80GG of the Indian Income Tax Act, 1961. It can help substantially save taxes for taxpayers who pay a significant amount of their income as house rent.
Below, we’ve mentioned some of the major reasons why it is mandatory to file Form 10BA before filing ITR.
Validation of Deduction Claim (Section 80GG)
The primary reason for filing Form 10BA before filing ITR is to validate the claim for the deduction under Section 80GG. In simple words, filling the Form no 10BA is considered an official declaration to the Income Tax Department regarding your eligibility for claiming the deduction, and your request mentioned later in your ITR won’t be disallowed.
Compliance with Income Tax Rules
Filing Form 10BA serves as official documentation and declaration to claim the rent deduction under Section 80GG. Submitting the form indicates that you’re compliant with the procedural requirement outlined by the Income Tax Department.
Avoid Disallowance of Deduction
You must submit a 10BA Form before submitting your Income Tax Return. Failing to do so will make the Tax Department disallow your request, as the information mentioned in the Form used to verify the legitimacy of your deduction claim.
Streamline Tax Filing Process
The Form 10BA consists of detailed information regarding the rent payments and related details. Submitting the Form before filing the ITR helps streamline the deductions because it works as a reference and proof for the information mentioned in the ITRs. It reduces the chances of any discrepancies and facilitates a smoother assessment process.
Ensuring Accurate and Complete Information
Form 10BA entails details related to rent payments, including the amount paid, the landlord’s details, and the address of the rented property. All the essential information is presented in a structured format that helps the income tax department to make accurate reports and verifications. When you file the Form before ITR, it ensures the accuracy and completeness of the details with respect to the rent deduction claim.
Documents Required For Filing 10BA Form Online
Here’s the list of documents required to file the 10BA Form to claim deduction under Section 80GG when HRA (House Rent Allowance) is not received.
1.Name, PAN, full address of assessee.
2. Consider rent amount, tenure, and payment mode.
3. The assessee’s declaration of not having any property owned by him, his spouse, and his minor child belonged to HUF.
4. Landlord’s name, address, and PAN (only if rent exceeds INR 1 lakh).
5. Keep a copy of the rent agreement/lease agreement with your landlord. It is not mandatory but advisable, as it can be used as supported evidence for tax authorities.
6. Other documents like bank statements or canceled checks demonstrating your rent payments made to the landlord are also advisable to attach.
How to Fill Form 10BA Online?
The Form 10BA of the Income Tax Act is required to be submitted online via the e-filing portal. Here, we’ve mentioned eight simple steps to fill out the 10BA form online.
- Visit the e-Filing Portal of the Income Tax Department by using your credentials, including User ID/PAN/TAN and Password.
- You will be redirected to the Dashboard. Navigate to the e-file > Income Tax Forms > File Tax Forms.
- Next, you will see the search bar at the top right corner of the page. Search for “Form 10BA” and opt for “Persons not dependent on any source of income.” Proceed with “File now.”
- Select the required assessment year and proceed with “Continue.”“
Move forward by clicking on the Let’s Get Started” on the next page.
- The Form 10BA of the Income Tax Department will be presented on display, and you will have to provide details for each selection. Tap on “House Property Details” and provide details of the Rented Address, Landlord’s Name and Address, and Details of the Rent Paid. Once you’re done with filling in all the details, click on the “Save” button.
- Now, you must click on the “Declaration” and tick the checkbox.
- Confirm by clicking on Save Preview and then proceeding to e-verify by using following mentioned below:
- Aadhar OTP
- Digital Signature Certificate (DSC)
- Electronic Verification Code (EVC)
Select for e-verification mode and Submit.
- Finally, the Form 10BA will be filed and e-verified successfully.
Follow these eight simple steps to file the returns without any issues. Now that you know how to submit Form 10BA online, let’s explore the possible outcomes if you miss the Form 10BA due date.
What If Form 10BA is not Filed within the Due Date?
In this year, the 10BA Form must be filed before 31st July 2024. If the taxpayer who intends to claim the deduction under Section 88GG of the Income Tax Act, 1961, fails to submit the form within the due date, it can lead them to face several consequences.
Below, we’ve mentioned some of the major consequences of failing to submit the Form 10BA due date:
1. Disallowance of Section 80GG Deduction
One of the most immediate consequences of not submitting the 10BA form on time is the disallowance of deduction under Section 80GG. The form serves as a mandatory declaration document to validate your eligibility for the desired deduction.
Not submitting the form on time leads the Income Tax Department to not obtain the essential information in a timely manner and proceed with your claims during your ITR. Therefore, you won’t receive your deductions and may even be indulged in further legal processes.
2. Increased Tax Liability and Financial Impact
The section 80GG deduction allows taxpayers to reduce their taxable income and their overall tax liabilities. If you do not file the 10BA form on time, you will end up losing these substantial benefits. Moreover, people paying a significant amount of their rent income will have to pay thousands more in taxes.
When the deduction claim is disallowed after filing the returns, you may also have to pay additional taxes, including the additional interests and penalties. Hence, it can significantly increase your financial implications, especially if you’re dependent on the deduction to minimize your tax outflow.
3. Penalties and Interest for Non-Compliances
Failing to file the 10BA Form on time leads a taxpayer to face severe penalties and interests, as it will be considered non-compliant with tax regulations. Simply put, when the income tax department identifies that you’ve claimed for the Section 80GG deduction without filing the 10BA forms, they may levy penalties for misreported income.
Plus, the tax department may also charge interest under Section 234B (for underpayment or non-payment of advance tax) and Section 234C (for deferred payment of advance tax) on the tax liabilities arising from the disallowance of the deduction. Overall, dealing with these charges and penalties may lead you to bear a financial burden.
4. Administrative and Procedural Complications
Another challenge of not filing the 10BA form on time is to complicate the tax filing process. In simple terms, if you realize, after filing your ITR, that your 10BA form is not submitted, you may be required to revise your income tax returns. These administrative and procedural complications may be a time-consuming process.
Plus, it may even trigger scrutiny from the Income Tax Department, which can let you have further administrative headaches. Therefore, you should ensure that you file the 10BA declaration promptly and accurately, as it will avoid any such complications and foster a smoother tax filing experience.
5. Complications in Tax Return Filings
Not filing the 10BA form on time may even complicate your future tax return filings. You may be led to face further subsequent assessments, including audits or inquiries, performed by the tax authorities. Here, you’ll be required to provide additional explanations and documentation to resolve the complications. This is definitely a time-consuming and stressful process, requiring the taxpayer’s significant time and effort.
How to Calculate Deductions Under Section 80GG?
Tax Rule 2A entails the deduction limit and tax deduction under Section 80GG. Following Section 10(13A), the least amount from the calculations mentioned below will be considered as non-taxable income or deduction under this section.
- Rs. 5,000 monthly or Rs. 60,000 annually.
- Yearly Rent – 10% of taxpayer’s ATI (Adjusted Total Income).
- 25% of adjusted total income for a year.
To calculate adjusted total income, you may have to reduce Gross total income from the following.
A. All deductions under Section 80C to 80U, excluding the deduction under this section.
B. STCG under Section 111A.
C. LTCG that are included in total gross income.
D. NRIs and foreign companies’ incomes are taxed at specialized tax rates, including incomes under Section 115A, 115AB, 115AC, or 115AD.
Once you calculate all the required three figures, ensure that you select the one that has the least value.
Let’s understand the concept of 80GG deductions by comparing two distinct examples, considering their different income and rent payments, which are mentioned in the table below.
| Aspect | Person A | Person B |
| Adjusted Total Income (ATI) | 5,00,000 | 3,00,000 |
| Total Yearly Rent | 120,000 | 60,000 |
| Deduction u/s 80GG of the Income Tax Act | ||
| Rs. 5000 monthly | 60,000 | 60,000 |
| Yearly Rent – 10% ATI | 70,000 | 30,000 |
| 25% of ATI | 125,000 | 75,000 |
| Deductions Applicable | ||
| 60,000 | 30,000 |
This table clearly showcases that Person A is liable to receive higher tax deductions u/s 80GG than Person B because of the higher ATI (Adjusted Income Tax). The least is chosen for both people as they are deductions, as per the standard rule.
Also Read: How To Maximize Your Tax Deductions Using CaptainBiz
Conclusion
The Form 10BA undoubtedly serves value to the indian taxpayers, allowing them to claim a significant deduction u/s 80GG for the rent paid. It substantially reduces your taxable income and overall tax liabilities.
Hence, it reduces the significant financial burden on the shoulders of salaried employees or self-employed professionals who don’t receive HRA (House Rent Allowance).
Ensure that you file your 10BA income tax act before the due date to claim the exceptional benefits of the 80GG deduction.
Frequently Asked Questions
Who needs to file form 10BA?
The salaried people and self-employed professionals seeking 80GG benefits are required to file the form 10BA. Ensure that you don’t receive HRA (House Rent Allowance) from your employer before applying for the 10BA form.
What is the maximum limit for 80GG?
As per the standard rule of 80GG deduction, taxpayers can receive the maximum deduction of INR 60,000.
How much of the rent is tax-free?
Under Section 80GG, you can calculate the tax-free rent in three simple ways, as mentioned below.
- Rs. 5,000 per month (or Rs. 60,000 annually).
- Annual Rent – 10% of your Adjusted Total Income.
- 25% of Adjusted Total Income
Any amount from these, which is least in value, will be deducted from your annual rent.
Is it possible to claim 80GG and interest on a home loan?
Yes, it is possible. You are legally allowed to claim both the deductions u/s 80EE and 80GG simultaneously.
Is it possible to claim 80GG without filing form 10BA?
You must file form 10BA to claim the deduction u/s 80GG. Make sure to file the form accurately and attach all the required documents. You haven’t received the HRA from your past or present employer for the entire fiscal year.
When should you file form 10BA?
You should file the 10BA before filing your ITR to claim the 80GG deduction smoothly and avoid any issues like the disallowance of the deduction. Moreover, you should also ensure that you file the form before the due date, as it was recently 31st July 2024.
Is it essential to submit proof for 80GG?
While submitting the form 10BA, you will be required to provide the rent payment details. If your annual rent exceeds the INR 1 lakh amount, you must submit your property owner’s PAN card to claim the 80GG deduction.
What is the late fee for Form 10BA?
Filing the form after the due date may result in late fees of Rs. 100 every day, up to a maximum of Rs. 5,000.
Is it required to file an ITR for rental income?
You need to mention your rental income under the “Income Tax House Property” category in the ITR 1.
Is it possible to file form 10BA after submitting your ITR?
It is mandatory to file the 10BA form before filing the ITR to claim the deduction under Section 80GG. Failing to submit it before ITR may result in the deduction being disallowed and even cause you to face potential penalties.