Claiming hra and housing loan deduction

Hello,

I have a question regarding claiming HRA and Housing Loan deduction. I have a small house at Chennai for which I'm paying back the housing loan. My parents live in this house and since they don't have any source of income, I do not collect any rent. In the same area in Chennai, I live in a bigger house separately paying rent. I want to know if I'm eligible to claim both HRA (Section 10) and Housing Loan Principal and Interest (Section 80C and 24) in this case. The eligible house rent comes to around 16K/month and the total interest paid for the year is close to a lac so both are significant amounts. However I don't want to end up in trouble by claiming it if its not eligible.

Thanks,

Sundar.

HRA is exempted under Section 10 (13A) of the Income-tax Act, 1961. While Home loan interest is deductible u/s. 24B of Income tax act. Both are independent sections, not binding each other for its applicability.

So, if you are getting HRA from your employer........ you are eligible for its claim as per limit specified in the section. On the other hand, if you are servicing a home loan you can claim tax benefits on principal and interest payments. Principal repayment, under Section 80C of the Income Tax Act, is exempted up to Rs. 1.5 lakh. And on interest repayment, exemption can be claimed up to Rs. 2 lakh, under Section 24B.

Well, in some cases, the Income Tax Department may question the tax exemption taken on both HRA and home loan. But if the claim are genuine, they are not denied. As the bursen lies over the assessee, in all such situations, the individual has to ensure that the related documentations (like lease deeds, possession/completion letters, etc.) and justification regarding occupying both the houses in same city are readily available with him/her if the such query is raised.