One can claim Tax Benefit on both HRA & Home Loan? Download Automated Income Tax Preparation Excel Based software All in One for Non-Govt (Private) Employees for F.Y. 2020-21 as per Budget 2020

Would I able to guarantee Tax Benefit for both HRA and Home Loan? – An inquiry which is frequently posed by many citizens. This is for the most part on the grounds that numerous businesses don't permit both tax cuts together in specific circumstances. Tragically this isn't the correct activity.

Both HRA and Home Loan Interest charge segments are irrelevant. You guarantee tax cut on HRA (House Rent Allowance) under section 10(13A) while the tax break on the instalment of enthusiasm on home advance goes under section 24(b). Anyway, there can be issues if both sections are utilized together with the purpose of tax avoidance.

We can have four circumstances for individuals guaranteeing HRA and Home Loan tax cut.

1.         Rented house instead of business and claim house in various city

2.         Own level in the city of work and remain in a leased house in the same city

3.         Own level in the city of business and remain with guardians/kin in a similar city and pay them lease

4.         Rented house in various city and possess house at the work environment

1. Leased house instead of business and claim house in various city

This is extremely simple to deal with. You can undoubtedly guarantee tax break on both and NO business has an issue with this game plan.

2. Possess a level in the city of work and remain in a leased house in the same city

DownloadAutomated House Rent Exemption Calculator U/s 10(13A) in Excel

This is a precarious circumstance. The principal sensible inquiry which rings a bell is a reason would any individual owning house in a similar city remains on the lease? Most managers have an issue with this course of action and may not give tax cut on both HRA and Home Loan.

Be that as it may, lawfully you can guarantee tax reduction on both on the off the chance that you can give a substantial purpose behind this course of action. The reasons can be it's progressively advantageous to remain. For example, your the level is on the edges with the practically immaterial open vehicle, you might not have any desire to live there and rather remain near your work environment. The other explanation could be the claimed house is littler for the size of the family. There are misguided judgments that there ought to be the least separation between two houses. This is a fantasy! All you need real motivation to remain on the lease.

Additionally in the event that you move to your new possessed house in a monetary year, its a real activity and you can guarantee HRA for the period you remained on lease and house credit advantage for the whole year. In the event that your boss isn't prepared to give tax cut on both – you can guarantee HRA tax break from the boss and guarantee tax cut on Home Loan while recording your Income Tax return.

The other inquiry is should the claimed house be expected to have a notional lease? The appropriate response is No. In the event that you get a real lease, at that point appear, at exactly that point you have to pay the charge on that.

3. Possess level in the city of business and remain with guardians/kin in a similar city and pay them lease

The the circumstance is comparable as talked about above with the distinction being your landowner or landlord is your nearby relative like guardians/kin. Any such rental exchange is full with doubt thus you ought to be cautious on the off the chance that you utilize this for charge sparing. You should do the accompanying:

1.         Actually compensation the lease through Check/ECS and so on and beneficiary should give lease receipt for the equivalent.

2.         The proprietor/woman should show this lease as "salary from house property" and pay charges on the equivalent.

There have been situations where lease paid to close family members have been denied tax break by personal assessment office as there was NO proof of real exchange. So remain cautious.

4. Leased house in various city and claim the house at a work environment

There might be a situation where you have leased a spot where your companion/guardians remain (in an alternate city) while you claim a house at the city of your work and remain there. For this situation, you can't guarantee HRA tax cut as HRA is paid for remaining on lease for reason for work. Anyway, you can undoubtedly guarantee home credit tax break.

Download Automated Income Tax Preparation Excel Based Software Allin One for Only Non-Govt (Private) Employees for the Financial Year 2020-21with the New Tax Regime & Old Tax Regime

Feature of this Excel Utility:-

1) Automatic Tax Calculated Sheet after filling your Salary Details in Individual Salary Structure.

2) Automated H.R.A. Exemption Calculation U/s 10(13A)

3) Calculation of Tax as per your choice Old Tax Regime or New Tax Regime U/s 11BCA

4) Automated Income Tax Form 12 BA

5) Automated Income Tax Revised Form 16 Part B

6) Automated Revised Form 16 Part B

7 ) Individual Salary Structure as per the salary structure of any Private Concern’s Salary Pattern.

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Second Home Loan Tax Implication and Benefit With Automated Arrears Relief Calculator U/s 89(1) for F.Y.2018-19

In 2017, Mr.A  had taken a home loan for buying a home in Delhi. The home loan amount was 15 Lakh tenure was 20 years and EMI was Rs.14976. He got transferred to Mumbai before two years.

He could have sold the old house and purchased a new house at Mumbai. But, he decided to purchase another house instead of renting. He has taken a second home loan of Rs 15 lakh for 20 years, for which EMI is about Rs.16, 550.

His total EMI outgo is 31526 Rs/-. Increasing floating interest rates are making his life difficult. He is unable to manage hefty EMI amount for both home loans. In addition to that, the earlier income tax interest exemption benefit under section 24 is now no more reality. The maximum interest amount is capped at Rs.2 Lakh. He has no option but to sell his first home.

There are many people in India who builds a second home to earn extra income or for living purpose. Buying a second home with the second home loan can be an attractive investment. However, before you proceed, here are a few tax implications that you must consider.

Download Automated Income Tax Arrears Relief Calculator U/s 89(1) with Form 10E From F.Y.2018-19

Second Home Loan Tax Implication and Benefit

• If an individual is holding more than one property in his/her name, only one property is considered as self-occupied. Its annual income will be considered as NIL. Another property is considered as ‘deemed rented out’ if it is not given on rent. This consideration is for income tax purpose.
• You can select any property as self-occupied. It is not compulsory that first property is only taken as self-occupied.
• If one house is rented out and second house is self-occupied, actual rental income of rented house is considered for calculation of income tax.
• If both houses are rented out respective rental income from both properties is taxable.
• In case of joint ownership of property and home loan is taken on joint names, rental income is computed corresponding to percentage share of each co-owner.
• You can hold multiple properties in your name. There is no restriction whatsoever.

Income Tax on Home Loan Principal Component –

• Home loan principal payment is exempted under section 80C. The maximum limit is 1.5 Lakh. This principal payment exemption rule is applicable only on the first house. (self-occupied property). For second home loan principal payment is not eligible for deduction under section 80 C.
• You can also avail principal payment exemption benefit if you have let out or vacant property and you are staying in a different city for the work.
• Above rule of principal exemption is not applicable on under construction property.

Income Tax on Home Loan Interest Component – 

• The tax exemption benefit on interest payment is allowed as per actual subject to a maximum of Rs. 2 lakhs (Rs. 3 lakhs for senior citizens). This condition is applicable for self-occupied for which construction is completed within 5 years from the end of the financial year in which loan      is taken.
• For the second home or additional properties exemption on interest is capped at lower of either 2 lakhs or actual interest payment. If any additional interest payment is done it can be carried forward to set off against house property income of subsequent 8 years.

Income Tax benefit from Second House – Rented or Deemed let out

If your property is rented or deemed let out, you need to use method given below to calculate Income or Loss from Property.

If your property is rented annual rental income must be known to you. If it is deemed let out, you need to assume annual rental value based on market rates.

You can deduct municipal tax paid on the house. In addition to that 30% standard deduction on rented income is allowed.

Income or Loss from Property = Rental Income – Municipality Tax – Standard Deduction 30% – Interest Paid

E.g Suppose your rented annual income from second property is Rs. 90000. Municipality Tax is Rs.2000 and you are paying Rs.120000 as a home loan interest payment. So, income or loss from the property will be –

Income or loss from property = Rs.90000 – Rs.2000 – Rs.27000 – Rs.120000 = -59000 Rs.

The negative income indicates it is a loss from housing property and you need to reduce this amount from your taxable income.

Should you buy Second Home for Rented Income or Tax Benefit?

As per me, you should not buy a second home for rented income or tax benefit due to following reasons.

1. Maximum interest deduction limit for a second house is 2 Lakh. This limit is applicable FY2017-18, AY 2018-19 onwards. This means you will not get that much tax benefit on a second home.
2. A second house is considered as let out property (if not rented) and you need to consider equivalent rental income while calculating a tax.

Considering present income tax rule and real estate market condition investing in second property is not recommended option.

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Download Automated Master of Form 16 Part B for F.Y.2017-18 With Claim Tax Benefit on both HRA & Home Loan?

Can I claim Tax Benefit for both HRA & Home Loan? – A question which is often asked by many taxpayers. This is mainly because many employers do not allow both tax benefits together in certain situations. Unfortunately, this is NOT the right thing to do.

Both HRA and Home Loan Interest tax sections are unrelated. You claim tax benefit on HRA (House Rent Allowance) under section 10(13A) while the tax benefit on payment of interest on home loan comes under section 24(b). However, there can be issues if both the sections are used together with the intent of tax evasion.

We can have four situations for people claiming HRA & Home Loan tax benefit.

1.                 Rented house in place of employment and own house in a different city

2.                 Own flat in the city of employment and stay in a rented house in the same city

3.                 Own flat in the city of employment and stay with parents/siblings in the same city and pay the rent

4.                 Rented house in the different city and own house at the place of employment

Click here to Download Automated Master of Form 16 Part B for Financial Year 2017-18 [ This Excel Utility Can prepare at a time 50 employees Form 16 Part B]

1. Rented house in place of employment and own house in a different city

This is a very easy situation to handle. You can easily claim tax benefit on both and NO employer has an issue with this arrangement.

2. Own flat in the city of employment and stay in a rented house in the same city

This is a tricky situation. The first logical question which comes to mind is why would any person owning a house in the same city stay on rent? Most employers have an issue with this arrangement and may not give tax benefit on both HRA & Home Loan.

But legally you can claim tax benefit on both if you can give a valid reason for this arrangement. The reasons can be it's more convenient to stay. For e.g. your flat is on the outskirts with almost negligible public transport, you might not want to live there and rather stay close to your place of employment. The other reason could be the owned house is smaller for the size of the family.There are misconceptions that there should be the minimum distance between two houses. All this is the myth! All you need a genuine reason to stay on rent.

Also if you move to your new owned house in the middle of the financial year, it's a genuine thing to do and you can claim HRA for the period you stayed on rent and house loan benefit for the entire year. In case your employer is not ready to give tax benefit on both – you can claim HRA tax benefit from the employer and claim tax benefit on Home Loan while filing your Income Tax return. 

The other question is should the owned house be assumed to have notional rent? The answer is No. If you receive actual rent then show, only then you need to pay tax on that.

3. Own flat in the city of employment and stay with parents/siblings in the same city and pay them to rent

The situation is similar as discussed above with the difference being your landlord or landlady is your close relative of parents/siblings. Any such rental transaction is full of suspicion and so you should be very careful if you use this for tax saving. You must do the following:

1.                 Actually, pay the rent by Cheque/ECS etc. and receiver should give rent receipt for the same.

2.                 The landlord/lady should show this rent as “income from house property” and pay taxes on the same.

There have been cases where rent paid to close relatives have been denied tax benefit by income tax department as there was NO evidence of the actual transaction. So stay careful.

4. Rented house in a different city and own house at the place of employment

There may be a case where you have rented a place where your spouse/parents stay (in a different city) while you own a house in the city of your employment and stay there. In this case, you cannot claim HRA tax benefit as HRA is paid for staying on rent for purpose of employment. However, you can easily claim home loan tax benefit.

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Claim Tax Benefit on both HRA & Home Loan

Can I claim Tax Benefit for both HRA & Home Loan? – A question which is often asked by many taxpayers. This is mainly because many employers do not allow both tax benefits together in certain situations. Unfortunately, this is NOT the right thing to do.

Both HRA and Home Loan Interest tax sections are unrelated. You claim tax benefit on HRA (House Rent Allowance) under section 10(13A) while the tax benefit on payment of interest on home loan comes under section 24(b). However, there can be issues if both the sections are used together with the intent of tax evasion.

We can have four situations for people claiming HRA & Home Loan tax benefit.

1.                 Rented house in place of employment and own house in a different city

2.                 Own flat in the city of employment and stay in a rented house in the same city

3.                 Own flat in the city of employment and stay with parents/siblings in the same city and pay the rent

4.                 Rented house in the different city and own house at the place of employment

1. Rented house in place of employment and own house in a different city

This is a very easy situation to handle. You can easily claim tax benefit on both and NO employer has an issue with this arrangement.

2. Own flat in the city of employment and stay in the rented house in the same city

This is the tricky situation. The first logical question which comes to mind is why would any person owning the house in the same city stay on rent? Most employers have the issue with this arrangement and may not give tax benefit on both HRA & Home Loan.

But legally you can claim tax benefit on both if you can give a valid reason for this arrangement. The reasons can be it's more convenient to stay. For e.g. your flat is on the outskirts with almost negligible public transport, you might not want to live there and rather stay close to your place of employment. The other reason could be the owned house is smaller for the size of the family.There are misconceptions that there should be the minimum distance between two houses. All this is a myth! All you need a genuine reason to stay on rent.

Click here to download Income Tax Calculator for Financial Year 2018-19 & Assess Year 2019-20 as per Finance Budget 2018

Also if you move to your new owned house in the middle of the financial year, it's a genuine thing to do and you can claim HRA for the period you stayed on rent and house loan benefit for the entire year. In case your employer is not ready to give tax benefit on both – you can claim HRA tax benefit from the employer and claim tax benefit on Home Loan while filing your Income Tax return. 

The other question is should the owned house be assumed to have notional rent? The answer is No. If you receive actual rent then show, only then you need to pay tax on that.

3. Own flat in the city of employment and stay with parents/siblings in the same city and pay the rent

The situation is similar as discussed above with the difference being your landlord or landlady is your close relative of parents/siblings. Any such rental transaction is full of suspicion and so you should be very careful if you use this for tax saving. You must do the following:

1.                 Actually, pay the rent by Cheque/ECS etc. and receiver should give rent receipt for the same.

2.                 The landlord/lady should show this rent as “income from house property” and pay taxes on the same.

There have been cases where rent paid to close relatives have been denied tax benefit by income tax department as there was NO evidence of the actual transaction. So stay careful.

4. Rented house in the different city and own house at a place of employment

There may be the case where you have rented a place where your spouse/parents stay (in a different city) while you own a house in the city of your employment and stay there. In this case, you cannot claim HRA tax benefit as HRA is paid for staying on rent for purpose of employment. However, you can easily claim home loan tax benefit.

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Automated Income Tax TDS on Salary All in One for Govt & Non-Govt employees for F.Y.2017-18, with Claim Tax Benefit on both HRA & Home Loan?

Can you claim Tax Benefit for both HRA & Home Loan? – A question which is often asked by many taxpayers. This is mainly because many employers do not allow both tax benefits together in certain situations. Unfortunately, this is NOT the right thing to do.

Both HRA and Home Loan Interest tax sections are unrelated. You claim tax benefit on HRA (House Rent Allowance) under section 10(13A) while the tax benefit on payment of interest on home loan comes under section 24(b). However, there can be issues if both the sections are used together with the intent of tax evasion.

We can have four situations for people claiming HRA & Home Loan tax benefit.

1.                 Rented house in place of employment and own house in different city

2.                 Own flat in city of employment and stay in rented house in the same city

3.              Own flat in city of employment and stay with parents/siblings in the same city and pay the rent

4.                  Rented house in different city and own house in place of employment

Click here to Download Automated Income Tax Preparation Excel Based Software for Govt & Non-Govt employees for the Financial Year 2017-18 as per new Tax Slab Rate. [ This Excel utility can prepare at a time Individual Salary Statement + Individual Salary sheet + Individual Salary Structure for both of Govt & Non-Govt employees Salary Pattern + Automatic H.R.A. Calculation U/s 1013(1) + Automated Arrears Relief Calculator from F.Y.2000-01 to 2017-18 with Form 10E + Automated Form 16 Part A&B and Part B for F.Y.2017-18]

Salary Structure for Govt & Non-Govt employees 

1. Rented house in place of employment and own house in different city

This is a very easy situation to handle. You can easily claim tax benefit on both and NO employer has an issue with this arrangement.

2. Own flat in city of employment and stay in rented house in the same city

This is a tricky situation. The first logical question which comes to mind is why would any person owning a house in the same city stay on rent? Most employers have an issue with this arrangement and may not give tax benefit on both HRA & Home Loan.

But legally you can claim tax benefit on both if you can give a valid reason for this arrangement. The reasons can be it's more convenient to stay. For e.g. your flat is on the outskirts with almost negligible public transport, you might not want to live there and rather stay close to your place of employment. The other reason could be the owned house is smaller for the size of the family. There are misconceptions that there should be the minimum distance between two houses. All this is the myth! All you need a genuine reason to stay on rent.

Also if you move to your new owned house in the middle of the financial year, it's a genuine thing to do and you can claim HRA for the period you stayed on rent and house loan benefit for the entire year. In case your employer is not ready to give a tax benefit to both – you can claim HRA tax benefit from the employer and claim tax benefit on Home Loan while filing your Income Tax return. 

The other question is should the owned house be assumed to have notional rent? The answer is No. If you receive actual rent then show, only then you need to pay tax on that.

3. Own flat in city of employment and stay with parents/siblings in the same city and pay the rent

The situation is similar as discussed above with the difference being your landlord or landlady is your close relative of parents/siblings. Any such rental transaction is full of suspicion and so you should be very careful if you use this for tax saving. You must do the following:

1.                 Actually, pay the rent by Cheque /ECS etc. and receiver should give rent receipt for the same.

2.                 The landlord/lady should show this rent as “income from house property” and pay taxes on the same.

There have been cases where rent paid to close relatives have been denied tax benefit by income tax department as there was NO evidence of the actual transaction. So stay careful.

4. Rented house in different city and own house in place of employment

There may be the case where you have rented a place where your spouse/parents stay (in a different city) while you own a house in the city of your employment and stay there. In this case, you cannot claim HRA tax benefit as HRA is paid for staying on rent for purpose of employment. However, you can easily claim home loan tax benefit.

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