Now Reading: HRA and home loan interest deduction: rules for claiming both
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HRA and home loan interest deduction: rules for claiming both
Taxpayers can claim both House Rent Allowance (HRA) exemption and home loan interest deduction simultaneously if certain conditions are met, according to tax expert Siddharth Maurya. The benefits are available only under the old tax regime. HRA under Section 10(13A) requires actual rent payment, while home loan interest deduction under Section 24(b) is capped at Rs 2 lakh for a self-occupied property, with no cap for let-out properties.
Claims can be made even if both properties are in the same city, but taxpayers must ensure the arrangement is genuine to avoid scrutiny. If the owned house is let out and the taxpayer rents in the same city, both deductions are legitimate. The Income Tax Department cross-verifies data through Form 26AS and other records, and mismatches can trigger notices. Taxpayers should retain rent agreements, receipts, landlord PAN if annual rent exceeds Rs 1 lakh, and loan certificates.
Indian Opinion Analysis
The key risk flagged is that the tax department now uses AIS and TIS data to match rent paid, property status, and loan interest, making mismatches easier to detect. For most salaried employees, the practical question is whether switching to the new tax regime, which does not allow these deductions, results in a lower overall tax. Many taxpayers with large home loans or high HRA in metro cities find the old regime beneficial, but the compliance burden is heavier. The next step for a taxpayer considering this dual claim is to check if their owned house is genuinely not occupied by them, and ensure the rent paid is at arm's length and properly documented to avoid a defective notice during ITR processing.
Source: livemint.com
This story was synthesised by AI from the source linked above. Methodology and corrections.
