Anupam (Finance Professional) (61 Points)
17 February 2016Hi,
Below are the few details regarding my queries.
Basic Salary – 34750
HRA – 17375
Home Loan Start date – August 2015
Possession Date – Dec 2015
Rent Paid (Non-Metro) – April to Dec 2015 (15,000 PM) – 9 months
Interest Paid Before Possession – 180000
Interest Paid After Possession – 150000
Principal Paid After Possession – 150000
Here are my question:
Shivani Mittal
(Practice)
(425 Points)
Replied 17 February 2016
A. HRA
Exemption for HRA u/s 10(13A) and rule 2A will be least of the following :
1. 40% of Basic Salary (for states other than Bombay, Calcutta, Delhi or Madras) = 34750*40% = Rs. 13900/- pm
2. HRA received = Rs. 17375/- pm
3. Rent paid - 10% of Salary = 15000-(34750*10%) = Rs. 11525/- pm
Hence, Taxable HRA = 17375-11525 = Rs. 5850 pm
B. Dec u/s 80C
Rs. 150000/-
C. Dec u/s 24(b)
It depends upon the nature of property i.e self-occupied/vacant/let-out & the dates of possession.
Post possession interest, from the financial year (FY) in which possession is taken, is allowed in its entirety if the property is let - out, else it is subject to a max of Rs. 200000/- from AY 16-17 onwards. Pre possession interest, uptill the FY immediately preceeding the FY in which possession is taken, is allowed in 5 equal installments from the year since the possession is taken.
Regards
CA Shivani Mittal
Anupam
(Finance Professional)
(61 Points)
Replied 17 February 2016
Hi Shivani,
Thanks for your quick response. :)
The house for which loan is taken is self occoupied.
Just for confirmation, as per my understanding.
1. 40% of Basic Salary (for states other than Bombay, Calcutta, Delhi or Madras) = 34750*40% = Rs. 13900/- pm
2. HRA received = Rs. 17375/- pm
3. Rent paid - 10% of Salary = 15000-(34750*10%) = Rs. 11525/- pm
Hence, Taxable HRA = 17375-11525 = Rs. 5850 pm
Annual Exemption will be (11525 * 9= 103725)
for 80c exempetion will be 150000
for 24b it will be 2,00,000
are the above calculation correct?
Now what my organization is doing
Rent paid - 10% of Salary = (15000*9)-(34750*12*10%) = 93300 (annually)
that is - 9 months rent paid minus 10% of 12 months Basic salary
Is this approch right ?
Shivani Mittal
(Practice)
(425 Points)
Replied 17 February 2016
In my opinion, salary should be taken for 9 months (basis rule 2A). Accordingly, your calculation is right.
Ded u/s 24(b) will be = 150000+ (1/5*180000) = Rs. 186000/- and not Rs. 200000/-. (Assuming that, interest for whole FY in which possession is taken is a part of Rs. 150,000/-)
Anupam
(Finance Professional)
(61 Points)
Replied 17 February 2016
Can I claim and exemption of Rs 2,00,000 under section 24b as the home loan start date and the possession date are of the same year.
does that have anything to do with 'HRA, I employer is exempting ony 70K and saying you cant claim HRA nd interest benefits both
Shivani Mittal
(Practice)
(425 Points)
Replied 17 February 2016
HRA and home loan are independent factors. Both can be claimed.
Assuming the year to be a financial year and not calendar year, which means that interest paid is Rs 150000+180000 = Rs 330000/- during the relevant FY. Hence, ded u/s 24(b) will be 200,000/-
Anupam
(Finance Professional)
(61 Points)
Replied 17 February 2016
Thanks a lot for the clarification
CAclubindia
