House Rent Allowance (HRA) and home loan repayments both offer tax benefits to taxpayers. If you receive HRA as a part of your salary and are also repaying a housing loan, then this article should clear the air on the subject.
As per section 10(13A) of the Income Tax Act, 1961, the least of the following amounts can be claimed as an exemption if you stay in rented accommodation:
If you have availed of a home loan, you will be paying off the principal and the interest component as home loan EMIs. You can claim tax deductions on this as follows.
The short answer is yes. You can claim the tax benefits on HRA and home loan repayments, subject to different conditions in different scenarios as follows.
If you receive HRA as a part of your salary and are also repaying a home loan, you can save taxes as outlined above. Furthermore, mutual funds like Equity Linked Savings Schemes (ELSS) can also help you save tax while simultaneously earning market-linked returns. Invest in these mutual funds or other funds of your choice with Fi Money commission-free.
Yes, the amount of your home loan or mortgage you repay during a given financial year can be claimed as a deduction from your total taxable income. The principal component of your home loan EMIs is deductible up to ₹1.5 Lakhs per year u/s 80C of the Income Tax Act, 1961, while the interest component is deductible up to ₹2 Lakhs per year u/s 24 of the Act.
To be eligible for a home loan, it is advisable to have a credit score of 750 or more. The higher your credit score, the more favourable the terms and conditions of your home loan.