HRA and Interest on housing loan

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Harini (Querist)
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12 February 2009 Hi i ahve this doubt abt claiming hra n interest on housing loan simultaneously when an employee is owning a house property declaring it as self occupied and also claiming HRA in the same city.

for example an employee is staying and working in bangalore claims HRA as well as interest on housing loan on a property which he claims as self occupied.

Is there any case law or a section restricting the same please state the same.

thak u harini

CA Abhishek Bagaria

CA Abhishek Bagaria (Expert)
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12 February 2009 You can claim both only if both the properties are not situated in the same city.

CS. Ashish Shah

CS. Ashish Shah (Expert)
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14 February 2009 Yes ,a person can avail both , if he satisfies conditions of both the provisions.

For claiming exemption on HRA foremost condition is that the assessee should pay RENT, only then one can claim exemption from HRA u/s 10[13A] of the I T Act read with rule 2A of the I T Rule.

Deduction of interest on loan is allowed only in three case

1. The property is given on rent,
2. The property is self occupied,
3. The property could not be self occupied on account of service/occupation, one can not live in the house.

So if a person has a self occupied property for the reason of employment living in another house, he/she can claim both interest exemption as well as HRA but if he/she is living in the same property which is self occupied, then he/she can only claim exemption from interest and principal amount (EMI) paid for the housing loan.

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