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Deduction on principal home loan payment is up to `1 lakh

You can claim the said amount paid under section 80C of the Income-tax Act.

I earn 10 lakh per annum. I have taken a housing loan of 36 lakh and the interest portion of the equated monthly instalment (EMI) is about 3.40 lakh for FY13. The property is let out and the rental income for this period is 1.80 lakh. After deducting property tax of 8,000 and 30% of the annual maintenance, the income from property comes to 1,20,400. How much tax exemption can I claim on the interest portion of 3.40 lakh?

—Laxmi

We have assumed that the housing loan has been availed against the same let-out property. As per the Income-tax Act, against the gross rent (1,80,000) from the let-out property, in addition to the deduction towards municipal taxes paid (8,000) and a flat deduction of 30% of the annual value (after deduction of municipal taxes), you can claim the entire interest of 3.40 lakh for determining your net taxable income from the rented property.

In your case, considering the rental and aforesaid deductions, there is a loss of 2,19,600 from the let-out property. The said loss could be offset against any other income earned during FY13 as per the prescribed provisions of the Act.

Further, the loss, if any, which cannot be set off against the current FY’s income can be carried forward to subsequent FYs, subject to a maximum eight FYs for set off only against the income, if any, from house property of subsequent FYs.

Also, with respect to the principal repayment of the housing loan you have taken, you can claim the said amount paid under section 80C of the Act up to 1 lakh per year.

I did not claim deductions for any of my investments last year when filing my income-tax returns and I do not plan to claim the deductions this year, too. Is that a problem from the tax authorities’ perspective?

—Divyendu

An individual can avail benefits in the form of exemptions/deduction in respect of the specified investments under the specified provisions of the Income-tax Act. It is at the discretion of the concerned individual to avail the specified exemptions/deductions in his personal tax return.

Hence, there will not be any penal consequences for not availing the deductions/exemptions in respect of the investments in the past tax returns and/or going forward.

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