The COVID-19 pandemic has pressured many individuals to work at home through the lockdowns. With the advantages of the work at home (WFH) tradition seen to each staff (as they might keep at their hometown and lower the price of staying in costly metro cities) and employers (as they might save on workplace lease, electrical energy, upkeep expenses and many others), the WFH goes to remain in India even after the top of the pandemic.
In reality, many firms are actually categorising the vacancies into “on site” and “permanent WFH” segments.
Taking the benefit, many staff – particularly these staying on lease in metro cities – might have shifted to their respective hometowns to avoid wasting on lease.
Now a few of such staff might consider shopping for a home for them of their hometowns for staying or funding functions.
But can a salaried individual – having workplace in a metro metropolis – purchase a home in hometown by availing a mortgage and declare tax deductions?
“Yes, a salaried person working in a metro city may claim tax deduction with respect to home loan interest u/s 24(b) of the Income Tax Act, 1961 (hereinafter referred to as ‘the IT Act’) upto Rs 2,00,000 for a financial year provided such house property is a self-occupied one,” stated Dr. Suresh Surana, Founder, RSM India.
In case an worker having fun with WFH buys a home for funding goal and let it out on lease, he/she might declare even larger deduction on house mortgage curiosity.
“The home loan interest deduction limit of Rs 2,00,000 would not apply if the said property is a let out property and the salaried person may claim the entire interest as tax deduction u/s 24(b) of the IT Act,” stated Dr. Surana.
“Moreover, the principal component of the home loan as well as the stamp duty value in connection with purchase of the new property can be claimed as deduction u/s 80C (cumulative limit for specified deduction) of the IT Act up to Rs 1,50,000,” he added.
“Another aspect which needs to be taken into consideration is claiming the House Rent Allowance (HRA) exemption u/s 10(13A) of the IT Act read with Rule 2A of the Income Tax Rules, 1962, if forming a part of his salary,” stated Dr. Surana.
The HRA advantages, nonetheless, will likely be topic to minimal of the next:
- Actual HRA acquired
- 50 per cent of wage for the reason that salaried individual resides in a metro metropolis and
- Rent paid in extra of 10 per cent of wage (Salary consists of fundamental wage, dearness allowance, if phrases of employment present so and fee as a proportion of turnover)
“The salaried person may be able to claim both the aforementioned exemptions with respect to home loan and HRA (if he is paying rent for stay in the metro city), subject to certain conditions,” stated Dr. Surana.
Source: www.financialexpress.com”