I keep in a rented home in Delhi as a result of I need to keep away from a protracted commute to work. I’ve additionally purchased a home in Greater Noida the place my household lives. I’m paying curiosity on the house mortgage taken for this property. Can I declare tax deduction for home lease allowance (HRA) and residential mortgage curiosity concurrently?
– Rohan Shah (Delhi)
Income Tax Act permits a deduction for HRA in addition to curiosity paid on the house mortgage. However, each deductions could be claimed in the identical monetary yr in sure conditions.
HRA is an allowance paid by employers to staff to fulfill the price of a rented home. Income Tax Act permits exemption in respect of HRA provided that the worker is staying in a rented home. To declare tax exemption, an worker should be paying lease for the home that he truly occupies. In case an worker lives in his personal home or doesn’t pay any lease, he can not declare an exemption for HRA.
Income Tax Act permits a deduction for curiosity on residence loans paid by a person taxpayer. This deduction of curiosity is on the market for each housing mortgage taken for buy, development, renovation or reconstruction of a residential home. The quantity of tax deduction relies upon upon the aim for which the home has been occupied – i.e. whether or not the home is occupied for one’s private use or for renting out to others.
In sure conditions, a taxpayer might keep in a rented home and can also be paying curiosity on a house mortgage. This scenario might come up the place a taxpayer works in a metropolis that’s completely different from his residence city or he pays curiosity on a house mortgage taken to purchase or assemble a home for the mother and father, partner or youngsters, and so on.
One can declare HRA exemption in addition to the deduction for curiosity on a house mortgage if one owns a home however lives in a rented home. Both these tax deductions are allowed provided that the home one owns and the home one lives in are at completely different places and there’s a real cause for not residing in a single’s personal home.
Therefore, you may declare a deduction for HRA in addition to curiosity since your office is in a special metropolis, or that your workplace is simply too removed from your own home. But it needs to be famous that enough explanations have to be offered to the employer or the Income Tax authority in case there’s a scrutiny of the small print offered.
– Tarun Kumar, is a Delhi-based chartered accountant. Queries and views at [email protected]
Subscribe to Mint Newsletters * Enter a sound e-mail * Thank you for subscribing to our publication.
Never miss a narrative! Stay related and knowledgeable with Mint.
Download
our App Now!!
