HRA has different set of rules while tax relief for home loan has different set of rule
A salaried person filing Income Tax Return (ITR) often finds it confusing whether they can claim income tax benefit on both House Rent Allowance (HRA) and home loan. Especially, when it repays home loan but stays in a rented accommodation. According to tax and investment experts, one can claim both tax benefits if they satisfy income tax rules for both claims. They said that tax benefit for HRA has different set of rules while tax relief for home loan has different set of rule. If a salaried earning individual has taken home loan but the home loan borrower is not living in that home and living in a rented home, then the salaried person may become eligible for income tax benefit for both home loan and HRA provided they fulfill income tax norms.
Speaking on the income tax rule for claiming tax exemption for one's HRA Mumbai-based tax expert Balwant Jain said, "HRA benefit is available for salaried earning individual only under some certain conditions. First and foremost condition is one getting HRA as part of one's salary, second condition is the salaried individual paying rent for the home which is occupied by him or her but not owned by him or her." Jain said that if a salaried person is fulfilling these conditions he or she can claim income tax benefit for HRA.
Speaking on income tax rules for home loan benefit Harsh Roongta, Head at Fee Only Investment Advisers said, "Income tax benefit for home loan can be claimed under two sections. For home loan principal repayment, one can claim benefit under Section 80C, which can't go beyond ₹1.5 lakh in single financial year. For home loan interest repayment, one can claim income tax benefit available under Section 24(b)."
Roongta said that one can claim income tax benefit on up to ₹2 lakh home loan interest paid toward up to two self-occupied properties. Roongta went on to add that one can claim income tax benefit on home loan only when it is owned by the earning individual.
Both Balwant Jain and Harsh Roongta said that there is no law that says those who own a house and pay home loan can't claim tax benefit for both home loan and HRA. They said that as long as the earning salaried person is fulfilling these rules for claiming home loan and HAR benefits, they can claim tax benefit for both HRA and home loan.