Is HRA allowed having Home Loan in the same city?

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  1. Ravindra Naidu

    Ravindra Naidu New Member

    Question 1) Can I avail HRA benefits though I have a home loan?

    Home loan has been sanctioned on March 2014. The EMI has been started from July 2014.
    Though the new home is in the same city, I've not occupied yet. Its vacant. I am staying in a rented house.
    ------------------------------
    Question 2) What's the criteria for Additional Home loan deduction under 80 EE? Am I eligible for this apart from Section 80 C?

    Loan sanctioned date: 19-March-2014
    EMI Started From: 01-July-2014
    Loan amount: 20,80,000 INR
    Home cost: 25,00,000 INR
     
  2. gaurav_kumar

    gaurav_kumar Well-Known Member

    1. Yes, you can claim both HRA as well as deduction for home loan togethor.
    2. Yes, you satisfy all the criteria for claiming deduction under Section 80EE. Therefore, deduction udner Section 80EE would also be allowed to you along with deduction under Section 80C
     
  3. Ravindra Naidu

    Ravindra Naidu New Member

    Thanks Gaurav for the quick reply. Regarding the second question...

    What's the difference between Section 24 and 80 EE? Could you please help me on how much can I quote under Sec 24, 80 C and 80 EE?

    upload_2015-1-6_18-35-25.png
     
  4. gaurav_kumar

    gaurav_kumar Well-Known Member

    Is the construction completed or is it an under construction property?
     
  5. Reply:
    (1) The claiming of exemption of HRA is governed by Section 10(13A) and Rule 2A. To avail exemption under this section there is no requirement that the employee should not own a house. If an employee resides in a rented property, he can claim exemption under this section, even if he owens a house in the same city or in a differenct city. But the exemption is not available if an employee resides in his own house or if the employee does not incur any expenditure on payment of rent.
    (2) Section 24 allows the standard deduction of (30% of net annual value) as expenditure and int on borrowed capital. Section 80C allows deduction ins respect of life insurance, contribution to PF etc ... and section 80EE ( applicable from the asst yr 2014-15 ) allows deduction in respect of int on loans taken for residential house property. It prescribes certain conditons viz: loan amount not to exceed Rs 25 lacs, value of house not to exceed Rs 40 lacs etc.... Section 24 and 80 EE seems to be similar but the conditions of admissiblity under both the sections are different. The ceiling of loan amount and value of house as in 80EE is not in section 24. The deduction allowed under 80EE is restricted to the interest payable or Rs 1 lac which ever is less. Section 80EE(4) speaks that 'Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provisions of the Act for the same or any other assessment year.'
     
    Ravindra Naidu likes this.
  6. Ravindra Naidu

    Ravindra Naidu New Member

    The flat construction has been completed in August 2014. But, due to interior works, I could not join yet. Thanks again for your kind help.
     
  7. gaurav_kumar

    gaurav_kumar Well-Known Member

    As the Construction has been completed, therefore you can claim deduction for repayment of principal under Section 80C of Rs. 86,730

    You can also claim deduction under Section 24 for interest on home loan of 1,47,3778

    Section 80EE is also a deduction for claiming interest on home loan. Taxpayers who have paid more interest as allowed under Section 24 can make use of Seciton 80EE.

    As the interest paid by you is less than amount allowed to be claimed as a deduction under Section 24, therefore you can claim the total interest amount as a deduction under Section 24 itself without making use of deduction allowed under Section 80EE
     
  8. Ravindra Naidu

    Ravindra Naidu New Member

    Nice explanation...Thanks Gaurav :)
     
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