There are various deductions one can claim during income tax return filing to avail tax exemption. House rent and home loan are two common ground which can be used to claim tax benefit. Many people stay in a rented house, but also buy another house on loan and goes through the situation when they pay for the both at the same time.
But is it possible to claim benefit for both of these together if one is paying rent and also buy a house on loan? The answer is “Yes” as Income Tax Act has provisions prescribed fro the same. They can claim benefit under the HRA provision for house rent during income tax return filing and also can claim benefit for home loans under section 24. Also, benefits can be claimed for principal repayment under section 80C to lower the taxable income.
For instance, one pays INR 5000 towards home rent, and have taken a home loan with monthly installments of INR 10000. The person gets an HRA of INR 7500 with a basic salary of INR 20000 then how his claims should be calculated. The HRA will be calculated as, received is INR 7500, 40% of basic salary is INR 8000, rent paid will be INR 3000. So, the exemption during income tax return filing will be counted as INR 3000. Remaining HRA will be counted as INR 4500 will be part of the taxable income.
To claim benefits for the home loan will be accounted by taking Gross Annual Value of the property as 00 and deductions on home loan interest will be allowed INR 1,00,000 per year. Net loss will be calculated as INR 1,00,000 which will ultimately be added to the taxable income.For such complex calculations, it is recommended that one must get expert advice before income tax return filing.