CA Praneet Agarwal (Chartered Accountant) (103 Points)
28 June 2012Dear Sir,
Mr.X has one owned house in city A. He had taken a house loan for its construction and is paying interest.
On the other hand he lives in another city B in a rented house and also gets HRA from his employer.
Now he wants to claim deduction of interest paid for the construction of owned house and also the exemption of HRA he receives from the employer. Is it possible?
CA Praneet Agarwal
(Chartered Accountant)
(103 Points)
Replied 28 June 2012
Please elaborate adequately for the conceptual understanding.
CS Sandip Rahane
(CS & Legal )
(368 Points)
Replied 28 June 2012
Yes.
If a salaried individual enjoying House Rent Allowances (HRA) from your employer and also own a residential house, then you can have an option to avail the deduction of both (a) HRA and (b) Housing Loan repayment & interest deduction.
The Income Tax Act, 1961 (“the Act”) treats HRA and home loan deductions under separate sections independently. The two are not interconnected to each other.
HRA is dealt with in section 10(13A) of the act while home loans are entitled for tax benefits u/s 80C for principle repayment and u/s 24 for interest payment.
When you can claim both the deductions?
Both the deduction can be claimed if you satisfy any of the following conditions:
You own a house in the same city but reside in a rented accommodation for a genuine reason.
CA Praneet Agarwal
(Chartered Accountant)
(103 Points)
Replied 29 June 2012
Thank you so much sir... You have provided the detailed solution for my query.
CAclubindia
