Tax Exemption on Home Loan and HRA | News and Blog for CA ...

Hello friends as financial year 2011-12 is going to end so salaried employees covered under tax bracket is looking for the areas and the ways regarding how they can reduce their tax liabilities.

One of the points at which salaried employee is confused and in doubt that whether they can claim tax benefits on loan taken for construction for house and HRA simultaneously. So here I am sharing the answer of this question.

Tax Benefits for home loan and HRA has not linked with each other i.e. both can be avail simultaneously if condition specified for both of these is satisfied by the assessee.

Conditions for claiming HRA:-

• Employee must living in a Rented House.
• Rent exceeds 10% of salary.
• HRA is received by the employee as a component of salary.

Further if you have also taken a loan for construction of house property then you can claim the said deduction also under section 80C irrespective of the fact that whether house is ?in the same city in which you are working or at any other place.

Condition for Deduction on Principal Repayment of Loan under section 80C of Income Tax Act 1961:-

• This deduction can be claimed from the financial year in which person starts to repay the home loan. Further under section 80C is available only if house loan is borrowed for purchasing or constructing a new residential house property and not for modification of existing house in form of extension, improvement, renovation etc.
• To claim tax benefits under section 80C for repayment of house loan a person must hold the house for a period of five years from the end of financial year in which possession is obtained by the person otherwise entire amount earlier allowed as deduction shall be treated as capital gain in the year in which assets is sell by the person.

Deduction on Interest Portion of Loan under section 24(b) of Income Tax Act 1961:-

• A person can claimed upto Rs 150,000 under head income from House Property provided that amount was borrowed on or after April 1, 1999 for acquiring or constructing a property and such construction must completed within 3 years from the end of financial year in which amount was borrowed.
• In other cases i.e. amount borrowed for the purpose of reconstruction, repairs of house property amount of deduction on interest shall be Rs 30,000.
• The above limits shall be applicable for self occupied house property only. In case house property is let out or deemed to be let out then entire amount of interest shall be deductible.

This entry was posted in Direct Tax and tagged 2012 tax planning, Condition for HRA exemption, Deduction under section 24(b), deduction under section 80C, estate tax planning, How to save tax, HR, HRA calculation, HRA Exemption, HRA Exemption under section 10(13A), income tax planning, pan no, personal tax planning, Posted in Direct Tax | Tagged Circular 05/2011 dated 16.08.2011 of the Income Tax Ac, real estate tax planning, Tax benefits on house loan, Tax Exemption on Home Loan and HRA, tax plan, Tax Planning, tax planning 2011, tax planning 2012, tax planning guide, tax planning strategies, tax planning strategy, Tax planning tips, tax saving, tax saving tips, tax tips, year end 2012 tax planning, year end tax planning. Bookmark the permalink.

Hello Friends, My Name is Naveen Chand Khulve. I am a November 2011 batch Chartered Accountant and Commerce Graduate [B.Com (H)] from Zakir Husain College, Delhi University in 2008. I completed my Article Training from S.C. Kwatra & Co. Right now i am working on my book on Information System Control and Audit (CA Final Book) and providing coaching to B.Com (H/P) students.

Source: http://www.naveenchandkhulve.com/tax-exemption-on-home-loan-and-hra/

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