Income Tax Rules: The last date for filing ITR is 31st July and it is near. This time, more than 2 crore people have filed their income tax returns. If you have not filed your ITR yet, then do it soon.
Despite the awareness campaign run by the Income Tax Department, many people are still confused about the new and old tax regime. In simple words, if you fall in the highest income tax bracket, then it is difficult for you to avoid paying more income tax in the new tax regime. But, you can claim more exemptions in the old tax regime. This reduces your taxable income and you also have to pay less income tax.
Some people are also confused about whether they should claim both home loan interest deduction and HRA together to reduce their taxable income. Both of these are big ways to save tax. It is also true that very few salaried class claim both deductions together to save tax. They think that only one of these two can be claimed. Whereas the truth is that they are eligible for it. Let us tell you how you can claim both these deductions together and save your tax.
Home Loan Deduction
If you have taken a home loan, then under section 80C, you can claim a deduction of up to Rs 1.5 lakh from the principal amount of the home loan every year. Apart from this, under section 24B, you can claim a deduction of up to Rs 2 lakh every year from the interest paid on the home loan.
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HRA deduction
is available as a part of the salary under section 10 (13A). It is 40% or 50% of the basic salary depending on the city. You can claim it after deducting 10% of the basic salary from the actual rent paid. For example, your basic salary is Rs 25000 and HRA is Rs 12500. In such a situation, if you pay rent of Rs 12000, then you can claim Rs 9,500 per month.
Do you have a house in one city but live on rent in another city?
Looking at the job situation in the country, many people prefer to go to another city for better career opportunities. In such a situation, if you have taken a home loan for a house in one city. But later you have moved to another city for a job, then you can claim both the deduction on home loan and house rent allowance (HRA). In some cases, people live in a rented house in the city where they work but take a loan to build or buy a house in their home town. Such people can also claim deductions related to both HRA and home loan together.
To claim HRA deduction, you must ensure that you live on rent in the same city where you work. For home loan interest deduction, you can claim exemption in both cases whether you live in the house for which you have taken loan or you have given it on rent. It is important to note here that you can claim loan repayment only for the house in which you live yourself.
Own house and rented house in the same city
In big cities, it takes hours to commute to and from office. In such a situation, you may be living in your own house but you will have to travel a long distance to reach your office in another part of the city. In such a situation, many people take a rented house near their office. Even in such a situation, you are able to claim HRA and home loan interest deduction. For this, you will have to prove that you have had to take a house on rent near your office in another part of the city.
Rented property and rented house in the same city
If you have taken a house to live in another city or in the same city where you live on rent, then you can still claim exemption on both HRA and home loan interest. Keep in mind that for the rented house, you can take exemption only on interest. You cannot claim exemption on repayment of principal amount.
