Taxpayers would like to know their entitlement to deductions towards the payments for housing accommodation and their entitlement for house rent exemption.
Tax Benefit on House Rent Allowance An allowance that is provided by an employer to the employee to cover the expenses of the accommodation rent which the employee may incur for his housing purpose is known as House Rent Allowance (HRA). The House Rent Allowance which is waged by the employer to the employee is taxable under the head of “Income from Salaries”
As per the Income Tax Act of India, the employee/assessed is exempted from paying income tax return online that’s why House Rent Allowance has picked up such a great amount of significance in the late years. Formula = HRA received – (less) Exempt = Taxable Amount.
Tax Benefit on Home loans Under section 80C of the Income Tax Act, the maximum deduction allowed for the repayment of the principal amount of home loan is Rs. 1.5 lakh. Deduction under section 80C also includes investments done in the PPF Account, Equity Oriented Mutual funds, Tax Saving Fixed Deposits, National Savings Certificate, etc. subject to the maximum of Rs. 1.5 lakhs. Besides this, there are stamp duty and registration charges that one can claim under the aforementioned section. Though, the claim can only take place in the year in which the payment has been made.
