Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
05 MAY, 2021
A smart taxpayer files and pays the taxes on time and is also aware of various ways to save on taxes. The Government of India provides various deductions and exemptions to the taxpayers to help them save taxes. However, not many know about them. Even for people who know, there is always room for confusion due to the high volume of information available and frequent tax updates. For example, do you know if you can avail tax benefits on purchased houses and rented houses together?
Yes, subject to certain conditions, you can claim both House Rent Allowance and interest on home loan under the Income Tax Act, 1961. Let us see how.
House Rent Allowance
The lowest of the following three values is allowed as HRA deduction:
Conditions for HRA
Interest on Home loan
If you have taken a home loan, you can claim the deduction on
This tax benefit is available for the purchase or construction of a residential property.
However, there are certain conditions you need to fulfil to claim this deduction -
Can You Avail Both?
There are no restrictions on claiming HRA and interest on home loan together even if both the houses are in the same city. However, there should be enough reasons for you to not stay in the house that you have bought. Often, such claims are closely monitored by the Income Tax officials. They can disallow some part of the claim if they are not satisfied, especially if the amount is relatively higher.
Moreover, to claim both, you should have all the necessary documents like the sales deed, completion certificate, etc. to justify the claim in case any query is raised.
To answer the question, yes, you can claim both the tax benefits together in the same year and reduce your taxable income significantly. However, you should maintain proper records and submit the relevant documents when required.
You have already rated this article