Wednesday, July 9, 2008

Even if you own a house, you can claim HRA deductions

Leading up to the last date of filing tax returns (July 31), over the past few weeks, this column has been dealing with various issues related with the tax-filing process.

Continuing with the same theme, this week we shall examine some of the finer points related to tax deductions —- these nuance are less commonly known and it is hoped that an understanding of the same would help the reader optimise his or her tax return, not only in terms of paying lesser tax but also making it error free.

First up is HRA or House Rent Allowance. Though the following point was covered in a recent piece, such widespread is the misperception that I think a reiteration is warranted. HRA and home loan provisions are two different issues as far as the Income Tax Act (ITA) is concerned and one does not influence the other. So, you may own a flat or any number of flats, either in the same city that you work in or anywhere else in the whole of India or for that matter abroad — this will, in no way influence the HRA deduction that you are entitled to. Conversely, notwithstanding the amount of HRA that you receive, your home loan deductions on the EMIs for the house that you have bought or intend to buy will not.
DNA - Money - Don’t mix HRA, home loan benefits

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