Home loan Interest and HRA benefit if flat is in same city ?

POSTED BY Amit ON December 23, 2013 6:26 pm COMMENTS (14)

Hi,

I have booked a flat on September 2012 and taken home loan from sbi of Rs. 28 Lakhs. Currently I am staying in a rented flat and I am getting  possession of my flat on 31st December 2013 . However both these places falls in the same city and  from January i am giving on rent.

I want to confirm that I can avail following benefit in this year (2013-14 income tax processing)

1) Home Load interest component under section 24B  (how much limit?)

2) HRA benefit ?

3) Interest of Year 2012-13  (how can claim in ITR?)

Please confirm. Thanks in advance.

14 replies on this article “Home loan Interest and HRA benefit if flat is in same city ?”

  1. ashalanshu says:

    Dear Amit, it’s my pleasure. Please feel free to ask in future also.

    Thanks

    Ashal

  2. Amit says:

    Dear Ashal sir,
    i got the point.
    you explain very well and in deep..
    thanks again.

  3. ashalanshu says:

    Dear Amit, for house property, you need to calculate net income.

    Net income = Gross Income – Expenses = 30000 – (9000 + 252000 + 68980/5)

    As net income is a loss, the same ‘ll be deducted from your salary income.

    Thanks

    Ashal

  4. ashalanshu says:

    Dear Amit, yes your basic calculation is correct. Please do note, you are alsoeligible for standard deduction of 30% out of 30K yly rental income for FY 2013-2014. Hence the income from house property for you in FY 2013-2014 = 30000 – (9000 30% of 30000+252000+68980/5)

    Thanks

    Ashal

    1. Amit says:

      Dear Ashalanshu Sir,
      thanks for reply.
      you have written this ” the income from house property for you in FY 2013-2014 = 30000 – (9000 30% of 30000+252000+68980/5)”

      Is this correct?? why are adding 252000 & 68980/5
      is this the income from house property for you in FY 2013-2014 = 30000-9000= 21000

  5. Amit says:

    Dear Ashanlanshu Sir,
    thanks for clearing doubt..

    i got this point from your old reply “There will be no maximum limit if giving on rent and rental income will be added as income from house property. ”
    i want to confirm this also ” The interest paid by me in FY 2012-2013, has any maximum limit as giving on rent?”

    Details:-
    Interest paid by me in FY 2012-2013 was Rs. 68980
    Interest paying by me in FY 2013-2014 is around Rs. 252000
    and giving on rent on Rs. 10000/- per month from January, (total till march Rs.30000)

    so can i claim interest under section 24(b) =( 68980/5) + 252000 = 265796 ??
    and income from house property =Rs. 30000 /-

  6. ashalanshu says:

    Dear Amit, please check the actual wording of said section 23 (2) and immediately after that 23 (3) where it’s clearly written that 2 ‘ll not be applicable if the house in question is actually given on rent for whole or part of a FY.

    http://law.incometaxindia.gov.in/DIT/File_opener.aspx?page=ITAC&schT=&csId=85d32b56-061a-4e3d-94d3-7e3c654cb158&rdb=sec&yr=303d6389-2d18-4432-bdbf-b74822b1a6df&sec=23&sch=&title=Taxmann%20-%20Direct%20Tax%20Laws

    Thanks

    Ashal

  7. Amit says:

    Dear Ashalanshu Sir,
    What is your view on Paresh comment.
    i checked this link
    http://www.incometaxindia.gov.in/archive/house_property.pdf
    this is written:-
    To save the taxpayer from hardship in such situations, it has been specifically provided that the annual value of such a property would be taken to be nil subject to the following conditions:
    • The assessee must be owner of only one house property.
    • He is not able to occupy the house property because of his employment, business etc. being away from place where the property is situated.
    • The property should not have been actually let.
    • He has to reside at the place of employment in a building
    not belonging to him [Section 23(2)(b)].
    • He does not derive any other benefit from the property
    not occupied.

    i want to give more information about me.
    right now my working location is Trivandrum and my flat is at Trivandrum and i am getting transfer to Ahmedabad on march 2014. that why giving on rent.
    from march 2014, condition will change that both things will fall in different city.

  8. Paresh Shetiya says:

    Section 23 (2) (b) of the Income Tax Act has not been considered in the comment by Ashal above. As per section 23(2)(b), in order to claim interest on a house property which is not actually occupied by the owner owing to employment carried out at any other place, ALL the following conditions have to be fulfilled:

    1. The property owned by him should not be actually let out during any part of the previous year. (yours will be let out, so this condition is not satisfied)
    2. He resides in another place in a building which is not owned by him.(you are staying on rent, so this condition is satisfied)
    3. No other benefit is derived from the owned property. (this condition is irrelevant in your case, as you are anyway putting it on rent).

    It follows that since condition 1 is not satisfied, you will not get the interest deduction.

    Does anyone have any other interpretation of Section 23 (2) (b)?

    Paresh

  9. ashalanshu says:

    Dear Amit, as you ‘ll be living on rent for full year, HRA benefit ‘ll be as usual.

    thaks

    Ashal

  10. ashalanshu says:

    Dear Amit, as the property is to be rented out, you can claim full year’s interest with out any limit. Dear Paresh has told you wrongly that for rented property you can not claim. Actually for self occupied the limit is 1.5L Rs. but for rented property, rental income ‘ll be added up but all the interest ‘ll be available for set off.

    The interest paid by you in FY 2012-2013, ‘ll be available @ 20% each in 5 FY starting from FY 2013-2014.

    Thanks

    Ashal

    1. Amit says:

      Dear Ashanlanshu,

      i got this point “There will be no maximum limit if giving on rent and rental income will be added as income from house property. ”
      i want to confirm this also ” The interest paid by me in FY 2012-2013, has any maximum limit as giving on rent?”

      Details:-
      Interest paid by me in FY 2012-2013 was Rs. 68980
      Interest paying by me in FY 2013-2014 is around Rs. 252000
      and giving on rent on Rs. 10000/- per month from January, (total till march Rs.30000)

      so can i claim interest under section 24(b) =( 68980/5) + 252000 = 265796
      and income from house property =Rs. 30000 /-

  11. Paresh Shetiya says:

    Sorry, I missed the part that your property will be let out from Jan onwards. In case your owned property is rented out or any other benefit is derived therefrom, you will not be able to claim interest deduction thereon unless it is actually occupied by you.

    Paresh

  12. Paresh Shetiya says:

    Hi,

    1. HRA can be unconditionally claimed by you during 2013-14.

    2. You can also claim interest under section 24(b) upto a max limit of Rs 1.5 lakhs during 2013-14, even though both the properties are in the same city, provided the reason for not occupying your owned house is that your employment is at “any other place”.
    What is any other place is not defined, but generally if your owned house is very far away from your place of work due to which you are staying in rented accommodation which is comparatively nearer to your place of work, then interest on your house will be allowed. However, if you are staying in rented accommodation for any other reason, interest will not be allowed.

    3. Interest for 2012-13 (and previous years, if any) will be allowed equally in 5 years starting from 2013-14. However, the limit together with normal interest for 2013-14 cannot exceed Rs 1.5 lakhs in any year.

    Thanks,

    Paresh Shetiya

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