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Housing / hra tax excemption

Jagadeesh (Team Lead) (35 Points)

21 June 2013

Hi,

I am salaried employee staying in a rental house in Coimbatore.

I have bought a house in Chennai and currently let it out for rent.

I forgot to submit the interest paid on housing loan document taken for Chennai house and also HRA receipt for Coimbatore house to my employer hence it was not shown in my Form16.

Now I would like to know which form should I use for ITR filing (ITR1 / ITR2) to claim tax excemption for the housing loan principal and interest taken for Chennai house.

Also is there any way by which I can show HRA receipt for Coimbatore house where I am staying for rental?

Kindly clarify.

Thanks,

Jagadeesh

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4 Replies

CA Vinay parmar (Chartered Accountant) (1318 Points)
Replied 21 June 2013

Hi Jagadeesh,

Answer to your first question yes u can take interest & Principal amount benefit by showing the interest amount under Income from House property and the same will get adjusted against your income from salary head and for this you can use ITR 1.

Further in reply to ur second question u can claim HRA benfit under section 80 GG only if the following condition are fulfill:-

Section 80GG - In case you are not in receipt of HRA and Rent free accommodation (RFA) and you/your spouse/children do not own any residential property either at the place of your work or residence, or if your spouse/children own a residential property at any other place (but not the assessee), then you can claim deduction for the rent paid as per sec 80GG under Income Tax Act, 1961. The same is explained below:

Deduction (under sec 80GG) allowed is least of the 3 options below:

a) Rs 2000 per month;
b) Excess of rent paid over 10% of Adjusted total income;
c) 25% of Adjusted total income where, Adjusted total income is-Gross total income - i) LTCG (if already included in Gross Total income) - ii) Aggregate (sum) of Deductions under Chapter VI A (excluding deduction under sec 80GG).

Note:

1) You need to be paying rent, and for your own accommodation, not for your parents' accommodation.
2) You need to declare that you are paying the rent. This has to be done by filling out and filing from 10-BA.
3) The house is to be situated within specified municipal areas. However, all major cities are a part of the specified municipal areas.

Hope this solves your doubt

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Jagadeesh (Team Lead) (35 Points)
Replied 22 June 2013

Hi Vinay,

Thank you for providing the detailed information. Just a small clarification, while showing Housing loan interest under Income from House prperty, can I directly specify the total interest amount?

For instance my total interest paid is Rs. 1, 32, 000.

Yearly rental Income from this house is Rs. 84, 000.

While filling the ITR1, I'll select the option as "Let out" and fill the interest as Rs. 1, 32, 000.

Is this correct? Where should I show this rental income of Rs. 84, 000 in ITR1?

Kindly clarify.

Thanks,

Jagadeesh

CA Vinay parmar (Chartered Accountant) (1318 Points)
Replied 22 June 2013

Hi Jagadesh,

You have to fill up the information under the head Income from House property, wherein you will select an option as let out property, you have to fill up the complete details of your Rented House address, and other information, thereon itself you have to show income from House property Rs.84000/-, if you have paid Municipal tax deducted from there, after that you will automatically get standard deduction of 30% . In your case 84000 - 30% of 84000 = 58800 will be taxable income, there after you will claim Interest deduction of Rs.132000 u/s 24b, your net income from House property will reflect as (-) 73200/-, which you will get setoff against Income from Salary.