Home loan interest exemption

Miss Rinkal (Student) (1304 Points)
Replied 16 September 2015

@ Manish Arora:

Correct me I am wrong?

You have only 1 property in which your parents are residing and you are residing in a property which does not belong to you

Now if you are residing in property which does not belongs to you, then the property in which your parents are residing can be treated as Self Occupied Property and it's annual value will be nil. Also you can claim deduction of Interest on home loan to the extent of 200000/- for that property. What your employer is saying will not hold true in the given case.

However if you have 2 properties, both are not let out then any 1 property as per Income tax Act will be treated as Deemed to be let out property and notional rent will be taken as the annual value and that rent will be fair market value of rent that has to be considered. In this case your employer must be knowing the market rate of the rent that could be available and hence would have told you to consider 50000/- as the rental value. However in the given caae , you can claim the entire interest on home loan without a cap limit of 200000/-

Manish (Software Engineer) (102 Points)
Replied 17 September 2015

@ Rinkal:

Yes you are right. I only have one property in which my parents are residing. I am living in a different city on rent. In that case i should declare the property as Self ocupied. I will try to clear it to my employer.

Thanks for your guidance.

Miss Rinkal (Student) (1304 Points)
Replied 17 September 2015

And otherwise also, employer does not have any right to allow or disallow any income or expenditure. It is the work of Assessing Officer. And if the employer still does not agree, tell him to see the provisions as shown in Sec 23(2)(a) of the Income Tax Act. Also if he still denies, you file your ereturn and claim it as SOP

2 Like

Manish (Software Engineer) (102 Points)
Replied 18 September 2015

I just discussed it with my employer. He said that there has been a notification from Income tax deplartment for the new changes in the exemption rule. Moreover he said that you can't claim both HRA and LOHP as self occupied even if you are paying rent in a different city.

Miss Rinkal (Student) (1304 Points)
Replied 20 September 2015

No, it is applicable in case your home and employment are in the same city. If both are different city then you can claim hra and home loan both. I.e. hra and self occupied both are eligible in your case. Tell him to show the revised circular and if you get it please upload here as uptil now there is no such circular / notification been put up. Instead there is clear clarification that if owned property and your workplace are in 2 different cities then you claim both of them.

Miss Rinkal (Student) (1304 Points)
Replied 22 September 2015

Please update us with what your employer had to say with the circular/ notification then

I have cross-verified the same. It is applicable only if workplace and owned property are in same city, then you cannot claim hra. But even in that there is no mention of interest on loan cannot be considered.