How to Save Taxes on Home Loans and HRA?
May 24, 2017 Legal Guidance
The equated monthly instalment (EMI) against the home loan comprises of the principle amount and the interest on the loan. All three – the principle paid, the interest and the HRA can be claimed s an exemption for the tax under different sections of the Income Tax Act. However, certain conditions need to be fulfilled for the same.
Taxes and saving:
According to the income tax rule, the person can claim exemptions on the investment and the expenses on this total income. The home loan deductions and the HRA fall under the different income tax sections. Section 10 (13 A) rule 2A talks about the exemptions in HRA while the section 80C talk about the home loan tax benefits.
Home Rent Allowance (HRA):
Home rent allowance is the tax concession given to employees for what they pay as their rent throughout the year. HRA can be claimed as the minimum of the HRA received from the employer or the 50 percent of the salary of the employee.
Home loan:
Under section 80C, the principle repayment exemption limit is Rs 1.5 lakhs, or the actual principle repaid, whichever is less.
Under section 24b, the interest repayment part has been capped to Rs 2 lakhs, or the actual principle paid, whichever is less.
Things to remember:
You can’t claim HRA if you have brought the house through home loan and are living in it, though you can claim certain tax benefits for the same.
You can claim HRA if you are living in a rented place.
If you have brought the house through a home loan but are living in another house and paying the rent, then you are entitled to claim for both.
Taxes and saving:
According to the income tax rule, the person can claim exemptions on the investment and the expenses on this total income. The home loan deductions and the HRA fall under the different income tax sections. Section 10 (13 A) rule 2A talks about the exemptions in HRA while the section 80C talk about the home loan tax benefits.
Home Rent Allowance (HRA):
Home rent allowance is the tax concession given to employees for what they pay as their rent throughout the year. HRA can be claimed as the minimum of the HRA received from the employer or the 50 percent of the salary of the employee.
Home loan:
Under section 80C, the principle repayment exemption limit is Rs 1.5 lakhs, or the actual principle repaid, whichever is less.
Under section 24b, the interest repayment part has been capped to Rs 2 lakhs, or the actual principle paid, whichever is less.
Things to remember:
You can’t claim HRA if you have brought the house through home loan and are living in it, though you can claim certain tax benefits for the same.
You can claim HRA if you are living in a rented place.
If you have brought the house through a home loan but are living in another house and paying the rent, then you are entitled to claim for both.
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