Very urgent urg.....can rent free accomodation and repaymen?
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
10 April 2012
Hi All,
Can employee claim Rent free accomdation and at the same time can claim deduction U\s 80C and inerest U\S 24B i.f self occupied...
Can employee claim Rent free accomdation and at the same time can claim deduction U\s 80C and inerest U\S 24B i.f self occupied...
10 April 2012
Yes, on satisfying certain conditions.
Querist : Anonymous
Querist :
Anonymous
(Querist)
10 April 2012
What are they...
My points are:
If employee avaling Rent Free Accomadation then:
1) Will it effect any way on 80C for Housing loan repayment(Prinacipal)
2) Will it effect any way on interest on housing loan whether its 30000 or 150000.
Please updaateme........
My points are:
If employee avaling Rent Free Accomadation then:
1) Will it effect any way on 80C for Housing loan repayment(Prinacipal)
2) Will it effect any way on interest on housing loan whether its 30000 or 150000.
Please updaateme........
10 April 2012
House -1 = Rent Free House
In case an employee has been provided a Rent Free Accommodation by his employer, depending upon the place/city, certain % like 15%/10%/or 7.5% of Salary is included in his salary income as perquisite.
So, the claim results in higher tax liability.
.
House 2= House owned by employee and due to his employment at other place. he has kept
this house vacant :
.
An employee enjoying RFH can claim 80C as well as Section 24(up to Rs 150000) benefits in respect to such house .
.
When Rental income of House 2 is being shown, Actual amount of interest (may be higher than 1.50lac) can be claimed.
.
In case an employee has been provided a Rent Free Accommodation by his employer, depending upon the place/city, certain % like 15%/10%/or 7.5% of Salary is included in his salary income as perquisite.
So, the claim results in higher tax liability.
.
House 2= House owned by employee and due to his employment at other place. he has kept
this house vacant :
.
An employee enjoying RFH can claim 80C as well as Section 24(up to Rs 150000) benefits in respect to such house .
.
When Rental income of House 2 is being shown, Actual amount of interest (may be higher than 1.50lac) can be claimed.
.
Querist : Anonymous
Querist :
Anonymous
(Querist)
11 April 2012
Dear Paras,
Thanks for your valuableinputs...
In this regards can you please elabarate:
like what are the exact conditions to fullfill to claim both RFA and 80C and interest on borrowed capital u\s24b......
and
HRA and 80C\24b
Best Regards
Aditya......
Thanks for your valuableinputs...
In this regards can you please elabarate:
like what are the exact conditions to fullfill to claim both RFA and 80C and interest on borrowed capital u\s24b......
and
HRA and 80C\24b
Best Regards
Aditya......
03 August 2025
Got it! You want clarity on whether an employee can claim **rent-free accommodation** (RFA) provided by the employer and still claim **tax deductions under Section 80C (principal repayment)** and **Section 24(b) (interest on housing loan)** for a self-occupied house, and also how **HRA** fits into this picture.
Here’s a detailed explanation:
---
### 1. Rent-Free Accommodation (RFA) and Tax Implications
* When an employer provides **Rent-Free Accommodation**, the employee is **taxed on a perquisite value** of the accommodation.
* The perquisite value is generally calculated as a percentage of the salary:
* 15% of salary if the accommodation is in a metro city
* 10% of salary if in a non-metro city
* Or 7.5% in some other cases
This amount is added to the employee’s **taxable salary** as a **perquisite**.
---
### 2. Claiming Deductions for House Owned by Employee (House 2)
Suppose the employee owns a house (let's call it House 2) which is either:
* Vacant due to job location, or
* Self-occupied
Then:
* The employee **can claim deduction under Section 80C** for the **principal repayment** of the housing loan taken for House 2.
* The employee **can also claim deduction under Section 24(b)** for the **interest paid on the housing loan** for House 2.
**Important:** This claim is **allowed even if the employee is provided rent-free accommodation by the employer**.
---
### 3. Conditions and Effects on 80C and Section 24(b)
* The **perquisite value (RFA)** being taxed does **not reduce or affect** the **deductions available under 80C or 24(b)**.
* The deductions for the loan repayment and interest relate only to the **house owned by the employee**, irrespective of whether the employee is paying rent or has rent-free accommodation.
* You **cannot claim HRA (House Rent Allowance)** when you are provided rent-free accommodation by the employer because HRA is an allowance meant for rent payment. But you **can claim 80C and 24(b)** deductions.
---
### 4. What if Employee Receives HRA?
* If the employee **receives HRA and pays rent** (does not have rent-free accommodation), then:
* Employee can claim exemption on HRA based on rent paid.
* Employee can claim 80C and 24(b) deductions if he has taken a loan for a self-occupied or rented house.
---
### Summary Table
| Scenario | Rent-Free Accommodation Provided | Claim HRA Exemption | Claim 80C (Principal) | Claim Section 24(b) (Interest) |
| ------------------------- | -------------------------------- | ---------------------- | --------------------- | ------------------------------ |
| Own house (self-occupied) | Yes | No | Yes | Yes |
| Own house (self-occupied) | No | Yes (if receiving HRA) | Yes | Yes |
| Renting and receiving HRA | No | Yes | NA | NA |
---
### To your direct questions:
1. **Will Rent Free Accommodation affect 80C for principal repayment?**
No, it does not affect the deduction under Section 80C for principal repayment.
2. **Will Rent Free Accommodation affect interest deduction under Section 24(b)?**
No, you can still claim interest deduction (up to Rs 2 lakh for rented property or Rs 1.5 lakh for self-occupied house) regardless of rent-free accommodation.
---
Here’s a detailed explanation:
---
### 1. Rent-Free Accommodation (RFA) and Tax Implications
* When an employer provides **Rent-Free Accommodation**, the employee is **taxed on a perquisite value** of the accommodation.
* The perquisite value is generally calculated as a percentage of the salary:
* 15% of salary if the accommodation is in a metro city
* 10% of salary if in a non-metro city
* Or 7.5% in some other cases
This amount is added to the employee’s **taxable salary** as a **perquisite**.
---
### 2. Claiming Deductions for House Owned by Employee (House 2)
Suppose the employee owns a house (let's call it House 2) which is either:
* Vacant due to job location, or
* Self-occupied
Then:
* The employee **can claim deduction under Section 80C** for the **principal repayment** of the housing loan taken for House 2.
* The employee **can also claim deduction under Section 24(b)** for the **interest paid on the housing loan** for House 2.
**Important:** This claim is **allowed even if the employee is provided rent-free accommodation by the employer**.
---
### 3. Conditions and Effects on 80C and Section 24(b)
* The **perquisite value (RFA)** being taxed does **not reduce or affect** the **deductions available under 80C or 24(b)**.
* The deductions for the loan repayment and interest relate only to the **house owned by the employee**, irrespective of whether the employee is paying rent or has rent-free accommodation.
* You **cannot claim HRA (House Rent Allowance)** when you are provided rent-free accommodation by the employer because HRA is an allowance meant for rent payment. But you **can claim 80C and 24(b)** deductions.
---
### 4. What if Employee Receives HRA?
* If the employee **receives HRA and pays rent** (does not have rent-free accommodation), then:
* Employee can claim exemption on HRA based on rent paid.
* Employee can claim 80C and 24(b) deductions if he has taken a loan for a self-occupied or rented house.
---
### Summary Table
| Scenario | Rent-Free Accommodation Provided | Claim HRA Exemption | Claim 80C (Principal) | Claim Section 24(b) (Interest) |
| ------------------------- | -------------------------------- | ---------------------- | --------------------- | ------------------------------ |
| Own house (self-occupied) | Yes | No | Yes | Yes |
| Own house (self-occupied) | No | Yes (if receiving HRA) | Yes | Yes |
| Renting and receiving HRA | No | Yes | NA | NA |
---
### To your direct questions:
1. **Will Rent Free Accommodation affect 80C for principal repayment?**
No, it does not affect the deduction under Section 80C for principal repayment.
2. **Will Rent Free Accommodation affect interest deduction under Section 24(b)?**
No, you can still claim interest deduction (up to Rs 2 lakh for rented property or Rs 1.5 lakh for self-occupied house) regardless of rent-free accommodation.
---
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