Hello All,
I am looking for a Tax expert advice on the below matter.
Can an employee claim benefit of both HRA and Housing Loan assuming that both the properties is located in the same city ?
One of the employee claims that although the property is located in the same city, he is staying at the house owned by his parents and he is paying rent for the same. Under this circustmance can he claim both HRA and Housing loan ?

From India , Bangalore
Dear Nisha,

If you are a salaried individual enjoying House Rent Allowances (HRA) from your employer and also own a residential house, then you can have an option to avail the deduction of both (a) HRA and (b) Housing Loan repayment & interest deduction.

The Income Tax Act, 1961 (“the Act”) treats HRA and home loan deductions under separate sections independently. The two are not interconnected to each other. HRA is dealt with in section 10(13A) of the act while home loans are entitled for tax benefits u/s 80C for principle repayment and u/s 24 for interest payment.

When you can claim both the deductions?

Both the deduction can be claimed if you satisfy any of the following conditions:

You should own a house in a city other than your work place.

You own a house in the same city but reside in a rented accommodation for a genuine reason.

You can claim deduction U/s 80C for housing loan principal repayment and u/s 24 for interest payment of loan taken for your own house.

HRA exempt under section 10(13A) is monetary perquisite which is paid or allowed by the employer for providing accommodation to employee. HRA deduction can be claimed for payment of rent for accommodation.

If you are receiving HRA from your employer and reside in your own house, then you can claim deduction in respect of home loan only. HRA deduction is not available to you. Hence if the reason for staying with the parents is genuine, then both the deductions are allowed.

From India , Pune
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