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Housing loan deduction

Raja (QA) (24 Points)

27 October 2014

Hello, Can somone answer this question? My property is registered in joint name in my name and my spouse. My spouse is also a tax payer, but my spouse is earning less. So I want to claim 100% of interest component as i am paying full emi and i have bank statements to prove that i am paying the emi. My employer says the interest can't be claimed 100% because the property is registered in joint name. My employer says he can allow only 50% of interest because the ownership proportion is not mentioned in sale deed. Can someone advise what is correct and proofs to argue with my employer?

Thanks.

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5 Replies

Ravi Ladia (Practising Chartered Accountant) (234 Points)
Replied 27 October 2014

On the basis of payment you can definitely claim the full benefit of deduction u/s 24 as well as 80C. Even if your employer does not let you take full deduction, you can let him deduct TDS and claim the same in your ITR to set off the same against your other incomes or else you can claim refund also. There are a number of cases in which the courts have ruled in the assessee's favour in such circumstances. Just make sure that you have adequate evidence to support your argument that you have made all the payments from your own account.

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NAVEESH DHAR (ADVOCATE- TAXATION ADVISOR) (427 Points)
Replied 28 October 2014

If the property is in joint names you are entitled for only 50% of the intt on housing loan u/s 24 and so far as repayment concern you can claim full amount i.e. 100% deduction of principle amount u/s 80c.

Ajay (CA Job) (512 Points)
Replied 28 October 2014

Dear Raja

Assuming the property is self occupied, that is, used for your own residential purpose, each of your share will be computed seperately and each of you will be entiltled to the dedcution of upto Rs.1,50,000 towards interest paid. But it is necessary that the person claiming the interest decution should have borrowed and also you are required to obtain a certificate from the bank which issued the loan which normally the banks send to you annually. So, if only you have borrowed the amount from the bank, you can claim the full interest as per the certificate against the NIL value of the self occupied property in question. But, if both of you have borrowed, I don't think you have the option to claim the full amount including that of your wife's portion in your return. But then, your wife can also claim the interest against the Nil value of the self occupied property. Anyhow, if both of you are in different slab rates, there will be increased tax payout. It is not relevant as to who has paid the EMI, instead the question is who has borrowed.

Also, declaring your house property income TO YOUR EMPLOYER is optional. If you feel that they are deducting TDS more than warranted, you can stop declaring the house property income to your employer and anyway you have to file your individual return and at that time you can declare your total income including the House Propoerty Income. However, since you will get the credit for the TDS deducted, it is in total, tax neutral, in the sense, you can claim refund of any execss TDS by your employer through your ITR.

Regards

Ajay

CA Brijesh Kumar (Manager (Credit)) (21 Points)
Replied 28 October 2014

TDS is not a tax in itself. it is just a machenism to collect the tax infact. so let your employer deduct TDS from your salary. You may file ITR claiming refund of excess TDS deducted (if any)

manoj (acct) (26 Points)
Replied 29 October 2014

Law should be universal to all. Let the employer to deduct tax (TDS) and employee will apply for refund is not right policy. Clarity should be there. Hope somebody have clear view on this issue.