Do you must forego HRA exemption to assert curiosity deduction on residence mortgage?

I’m at the moment working with an organization in Chennai and reside in a rented home in opposition to which I declare a tax exemption from the Home Lease Allowance (HRA) in my wage. I wish to purchase a home in my hometown in Telangana the place my mother and father can reside and I additionally intend to maneuver again in a number of years.

Can I get any tax advantages for buy of a home even when I don’t reside there? If sure, will I’ve to forego the exemption advantage of HRA which I’m at the moment getting?

– Title withheld on request

A basic confusion amongst salaried folks is whether or not they should forego the exemption advantage of Home Lease Allowance (HRA) obtained from their employer to assert a deduction of curiosity on their residence mortgage.

Since you’re at the moment claiming the tax exemption for HRA, you need to have opted for the outdated tax regime.

When a taxpayer owns a home property in respect of which he companies a house mortgage however resides in a special metropolis owing to work or some other justifiable motive, he could also be entitled to assert the next advantages in Earnings Tax beneath the outdated tax regime:

i) Tax exemption foundation part 10(13A) of Earnings Tax Tact for hire paid in opposition to HRA obtained from his employer

ii) Deduction from taxable earnings (as much as 2 lakh a yr) beneath part 24(b) of the Earnings Tax Act for curiosity paid on the house mortgage of the owned property

iii) Deduction from taxable earnings (as much as 1.5 lakh a yr) beneath part 80C of the Earnings Tax Act for principal reimbursement of the house mortgage for the owned property

Nonetheless, not one of the above advantages is on the market if an individual has opted for the brand new tax regime launched within the monetary yr 2020-21.

(Question answered by Amit Bhachawat, CFO, India Mortgage Assure Corp. In case you have any private finance queries, write to mintmoney@livemint.com to get them answered by consultants.)

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