Here is how you can Claim Tax Benefits on Both HRA and Home Loans
Jun 13, 2018 Legal Guidance
Every tax payers dream is to avail more exemption to have more savings. One can claim tax exemption for they are paying both home loan and are paid home rent allowance (HRA) by their employer. The principal amount and the interest amount together make the monthly EMI amount. After all the conditions are fulfilled, they can be claimed for exemption under different sections of Income tax Act, 1961.
Let us explain it in detail, IT act allows the taxpayers to claim exemption on investments and expenditure incurred out of the total income. The exemption on the principal repayment can be claimed under section 80C while the exemption for the interest paid can be claimed under Section 24B. Section 10 (13A) allows the tax payer to claim the exemption on HRA.
For the people living in metro cities, 50 percent of their salaries have to be shelled out for HRA or the lowest actual HRA received from the employer or 10 percent of their salary including basic salary, dearness allowance and turnover based commission which was deducted from the actual rent paid. Under Section 80C, Rs 1.5 lacs can be claimed as principal repayment amount or the actual amount of principle repayment.
Under section 24B, Rs 2 lacs can be claimed for interest exemption or actual amount of interest payment on the loan, whichever is less. If the house is rented instead of being self occupied, then the entire amount can be exempted.
Let us explain it in detail, IT act allows the taxpayers to claim exemption on investments and expenditure incurred out of the total income. The exemption on the principal repayment can be claimed under section 80C while the exemption for the interest paid can be claimed under Section 24B. Section 10 (13A) allows the tax payer to claim the exemption on HRA.
For the people living in metro cities, 50 percent of their salaries have to be shelled out for HRA or the lowest actual HRA received from the employer or 10 percent of their salary including basic salary, dearness allowance and turnover based commission which was deducted from the actual rent paid. Under Section 80C, Rs 1.5 lacs can be claimed as principal repayment amount or the actual amount of principle repayment.
Under section 24B, Rs 2 lacs can be claimed for interest exemption or actual amount of interest payment on the loan, whichever is less. If the house is rented instead of being self occupied, then the entire amount can be exempted.
Conditions that apply:
- Deduction on home loan repayment can be claimed but the deduction on HRA is only granted if one is living on rent. Tax benefits for both can be claimed only if certain conditions are fulfilled. For example, if you have bought a house and you live in it then you can claim exemption on the principal amount and interest paid but not on the HRA you receive.
- If you have bought a house but you live in the rented one then you will have to explain why you live in rented house. You can claim benefits for both given you have a solid explanation for living on rent.
- Exemption on HRA cannot be claimed if you are living on the property let out by the employer. Similarly, if the employer is the joint owner of the property and pays a certain amount of rent to another owner, then the exemption cannot be claimed.
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