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Hi Experts,

I have recently switched my job. In my previous employment, I had indicated tax excemption for the two housing loans i am paying. The first property (in Cochin where my parents live) had been indicated as the self-occupied property and I opted to get the max benefit on the principal under 80C (100000). The interest component on that (150000) was filed under 24c.

For the second home, which is left vacant, I had indicated a loss of income of Rs 300000 (calculated after the notional income and maintenance expenses). I am given to understand from my new employer that my previous employer had considered this amount together with the interest component on the self occupied property and filed it under section 24c.

I am having a problem with my Net Income calculation currently, with the new employer refusing to add the loss of housing property while calculating the Net Pay. I have pasted his explanation below. I am confused now. Since they are calculating a max cap of 150000 under 24c, and the previous employer considering more than that, my take home is considerably reduced. Is my new employers justification correct? If so, how can i get the exception which i know i am eligible with the second housing loan?

Thanks in advance…

————-

Interest on let out property is always deductible under section 24.. Issue is, whether to consider the same in the Payroll or not..

 

With reference to the CIRCULAR NO : 08 /2013 F.No. 275/192/2013-IT(B) Govt of India, para no. 3.5 read with para no 3.6.1, an employer can only consider the interest paid on self occupied property. The para reads as follows:

 

 3.6.1 Conditions for Claim of Deduction of Interest on Borrowed Capital for Computation of Income From House Property Section 24(b):

 

Section 24(b) of the Act allows deduction from income from houses property on interest on

borrowed capital as under:-

(i) the deduction is allowed only in case of house property which is owned and is in the

occupation of the employee for his own residence. However, if it is actually not

occupied by the employee in view of his place of the employment being at other place,

his residence in that other place should not be in a building belonging to him.

(ii) The quantum of deduction allowed as below:

 Acquisition or construction of the house On or after 01.04.1999 Rs. 1,50,000/-

 

Hence, in view of this, being an employer, Company cannot take the deduction of interest on loan paid on Let out property. However, as I have already mentioned in one of my earlier mails, you can declare the same during your personal income tax filing and get the deduction.

 

For payroll purposes, maximum amount that can be considered is Rs.1,50,000/-. But as your previous employer has already taken Rs.2,21,298/-, we will have to consider Rs.2,21,298/-, which we have already done.

——————–

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1 Answers

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1 ashalanshu November 21, 2013 at 2:11 am

Dear Anand, I think the goof up is there in the said circular. Here is the link of the circular.

iiserbhopal.ac.in/PDF/Income%20Tax%20on%20salaries%20FY%202013-14.pdf

Interestingly the main point i.e. 3.6 clearly states that information for all properties should be obtained but the language used in point 3.6.1 give the impression that deduction is restricted to 1.5L Rs. only. Actually my personal view is – this point 3.6.1 is to give guideline for self occupied property and not for rented property.

As your employer is not co-operating, your only option is to claim refund later on. Alternatively, you should write to your Assessing officer to provide the guidelines/clarification for your employer to accept your case. based upon your AO’s clarification, your employer ‘ll surely accept your calculation.

Thanks

Ashal

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