Dear Members
My query is regarding TDS on Salary & Loss from House Property.
An employee is working in Delhi & is paying Rent & is claiming HRA tax rebate. He also has taken a Housing Loan and the House is in Mumbai. The house in Mumbai has been let out by him and he is getting rental income from the same.
My queries are as follows:
- Can his interest on housing loan be allowed as loss from house property for the purpose of TDS on Salary Income? If yes, what is the maximum limit?
- Can his repayment of housing loan be allowed as deduction u/s 80C for the purpose of TDS on Salary Income?
- Should his income from house property be considered by the employer while allowing the benefit of loss from house property due to interest on Housing Loan for TDS on Salary Income?
Kindly let me know the correct treatments & reference of any CBDT circulars (if any) for my better understanding.
Warm Regards
Anutam
Dear Anutam,
1). Loss from house \’property allowed to set off to income from salary. In case property let out then entire amount of interest allowed to set off from salary and in case of self occupied then maximum Rs. 150000 should be allowed as per section 24B of income tax act 1962
2) Re-payment of housing loan should be allowed only for Interest on loan. Principal amount of housing loan should not be allowed. for the purpose of TDS on salary.
3) Yes, income from house property be considered employer while the benefit of loss from house property to interest on housing loan for the TDS of salary.
Regard
ABID ALI ANSARI
(CA FINAL. B.COM)
Dear Anutam
An employee can claim both HRA and home loan benefits together. Also, employers do have regulations in this regard, therefore, it is wise and advisable in the following situations to cross check with you claim HRA and home loan benefits together.
House rent allowance (HRA) and home loan come under different sections of the Income tax act and operate independent of each other. While the former is dealt with under Section 10 (13A) Rule 2A and is claimed based on certain situations, the latter derives benefits under Section 80 C (Principal repayment) and under Section 24 (home loan interest payment) of Income Tax Act.
Before moving ahead, it is important to reiterate that House rent allowance can be claimed if;
Analysis of below scenarios points out the possibilities of taking maximum advantage of HRA andhome loan.
Situation 1: Self-Occupied House – If you reside in the same house for which you have taken the loan, then HRA cannot be claimed for it, but, principal repayment and interest payment under Sections 80C and 24 can be claimed respectively.
Situation 2: House owned in another city – It is common in India, people take home loan for home owned in their native city while they continue to reside in rental accommodation in a different city, due to work or other similar factors. Here, a person is eligible to claim HRA as well as principal and interest repayment.
Situation 3: House owned in a city where you work- If the home loan is taken for a property owned in a city where you work then still you can claim HRA in these possible conditions.
a) Home under-construction – If you are compelled to live in a rental home as the home for which you have taken loan is still under-construction, then you are eligible to claim HRA and principal repayment before completion of the house. However, Interest repayment can only be claimed in five equal instalments in the financial year in which construction is complete and house is ready to use. HRA could not be claimed post-construction of the house.
b) House ready to use but cannot be occupied due to genuine reasons – House brought in the same city as work but cannot be occupied due to valid reasons like house being very far from work place, etc. then Income tax act permits one to claim HRA as well as home loan benefits.
However, the tax liability will arise on notional rent even if the house remains vacant.
c) Rented own house and residing in a rented house – If a ready to use home for which home loan is taken is rented out to someone else, while you continue to reside in a rental accommodation then HRA along with the home loan benefits could be claimed.
On the other hand, since you are recipient of rental income, then the tax would be applicable to the rental income received.
Hence, in specific cases an individual can claim both HRA and home loan benefits together. Also, employers do have regulations in this regard, therefore, it is wise and advisable to cross check with the employer before you claim HRA and home loan benefits together. I hope this would clarify some your doubts regarding HRA combined with Home loan.
Regards
CA Pushkar Gupta
(A.C.A, B.Com.)
Subhash Mittal & Associates
Chartered Accountants
512 A, Deepshikha Building,
8 Rajendra Place, New Delhi – 110008.
Dear Pushkarji,
Greetings from Hyderabad!
Thanks a lot for providing such a detailed reply which is so self explanatory.
Regards,
B V Soma Sastry
Yes both are consider in 80 C and limit is 1,00,000.00
Regards
Rajesh Jain