Benefits for the person who have Housing Loan : Housing Loan is taken by a person when he purchases a house and financed the part of the consideration from the financial institution for a certain period of time to be paid back in the instalments. When finance is taken which come with some cost also have many advantages with it. In income tax there certain benefits which are granted to the assessee who has got the house finance. Here are some of the benefits which an assessee can enjoy. Deduction under Sec 80C for Principle: When an assessee gets the housing loan from the approved institution than he can take the deduction under this sec for the principal paid per annum. Approved institution means:- • Any Housing Board. • Any Co-operative society • Banks including co-operative banks. • Central Governments and state Governments • LIC • National Housing Banks • Any Public Company in which public is substantially interested Note:- Stamp Duty, registration fee and other expenses for the purpose of transfer is also allowed under this sec. Max limit for the deduction under the 80C is Rs.1,00,000 Deduction under Sec 24B for the interest: When an assessee pays the interest on the Loan taken by him than he can take the deduction under this sec for the interest portion upto the limit of Rs.1,50,000 per annum per person. Here deduction for interest is available to both the joint holder if property is in the joint name. The deduction shall be claimed under the heading Income from House Property as a self occupied property. By availing the housing loan option an assessee can enjoy the deduction benefits of Rs.2,50,000 per annum which will saves a tax of Rs.75,000 approx on upper slab. Benefits for the person who pays House Rent Every assessee is allowed a deduction in respect of expenditure towards payments of rent accommodation occupied by him for his own purpose provided the following condition satisfied:- • He must be the self employed person or a salaried person who is not in receipt of HRA • He, his spouse and his minor child should not have any house where the person resides and performs his duty and business and profession. • File a declaration in form 10BA regarding the expenditure paid by him. If the assessee satisfies the following condition than he can avail the least of the following exemption. • Rs.2000 Per Month • 25% of total income • The excess of actual rent paid over 10% of total income Note:- Total income excludes long term capital gain, Short term capital gain under sec 111A and after providing deduction under sec 80C to 80U except 80GG. Let us evaluate these situations in brief: If you live in your own home – If you have taken a home loan to purchase the house you are residing in then you are not entitled for the HRA benefit since you are not residing on a rented property. However tax benefits on principal repayment and interest payments can be availed by the person. Having home possession in another city – For instance you have a house in one city for which you have taken a home loan and you reside in another city due to work or similar reasons, then you are eligible to avail all the benefits including HRA, tax benefits on principal repayment of home loan and tax benefit on interest payments of home loan. So we evaluate that Housing loans is much more better for the person from tax point of view because it provides investment based deduction scheme with a ceiling limit of Rs.1,00,000 p.a. and Rs.1,50,000 p.a and in HRA there is a expenditure based deduction scheme with a ceiling limit of Rs.24000 p.a. We www.taxmantra.com have the specialised team to streamline all the affairs relating to the issuance of TDS certificate and to solve the queries related to the TDS credit or reconciliations. Do feel free to contact us for any queries. Taxmantra.com provides most hassle free tax return filing/ online return filing experience. Once you have collected, your salary certificate and other documents, we request you to please log in to www.taxmantra.com/ereturns or you can also directly mail at info@taxmantra.com to submit the details. Upon receiving the documents, we would contact you to file your return of income.