Simultaneous tax benefit on HRA & Home loan!


Simultaneous tax benefit on HRA & Home loan!

Deduction for Interest Paid on Housing Loan under section 24(b) of Income Tax Act 1961.

Income tax benefit on housing loan is available subject to the following conditions:

  1. A home loan must be taken for the purchase/construction of a house and the construction of the house must be completed within 5 years from the end of financial year in which loan was taken.
  2. If EMI is paid for the housing loan, it has two components interest payment & principal repayment. The interest portion of the EMI paid for the year can be claimed as a deduction from your total income up to a maximum of Rs 2 lakhunder section 24(b) of Income Tax Act 1961 for self occupied house property. For let out property, there is no upper limit for claiming interest.

Deduction under section 80C of Income Tax Act 1961 on Principal repayment and stamp duty and registration charges.

  1. The Principal portion of the EMI paid for the year is allowed as deduction under section 80C of Income Tax Act 1961. The maximum amount that can be claimed is up toRs 1.5 lakhs. But to claim this deduction, the house property should not be sold within 5 years of possession. Otherwise, the deduction claimed earlier will be added back to your income in the year of sale.
  2. Besides claiming the deduction for principal repayment, a deduction for stamp duty and registration charges can also be claimed under section 80C of Income Tax Act 1961 but within the overall limit of Rs1.5 lakhs. However, it can be claimed only in the year in which these expenses are incurred.


Now, the question arises whether HRA and Housing loan tax benefit can be claimed simultaneously. First, Let us know about HRA.


The House Rent Allowance (HRA) tax benefits are only applicable for those employees who stay in a rental accommodation. If an individual is staying in his/her own house, he/she won’t be eligible to claim the amount for tax deductions. As long as the rented house is not owned by the assessee, the tax exemption of HRA will be available up to lower of the following three options:

  1. Actual HRA on pay slip;
  2. 40-50% of basic salary;
  3. The rent amount minus 10% of the salary.

HRA is calculated at 50% of salary for Mumbai, Kolkata, New Delhi or Chennai. In other cities, HRA is calculated at 40% of the salary.


Thus it is concluded that benefit of HRA and Tax Benefit can be claimed simultaneously as there is no direct link between both the sections. HRA and tax benefit on home loan go hand in hand and are admissible independently. Both the benefits are available simultaneously subject to fulfilment of conditions mentioned above.

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