Income Tax Deduction on HRA and Home Loan

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Income Tax Deduction on Home Loan and HRA

HRA CalculatorDoes the Income Tax Act allow to claim HRA deductions and interest on mortgage loans? This is one of the biggest questions for paid taxpayers, and they want clarity as well. In some cases, as described below, you may request a reduction in HRA and mortgage interest rates, depending on the circumstances. However, first and foremost, a person must pay rent for the HRA deduction. Also, the HRA and home loan disbursements are managed under various sections of the Income Tax Act.

While exemptions from the HRA may be sought under section 10 (13A) of the Income Tax Act, deductions for the principal home loan interest and interest on it may be claimed under sections 80C and 24B, respectively.

Possible conditions in which one can claim both HRA and home loan interest benefits

  • If a person owns a house in another city – In this particular case, the landlord is allowed to claim both the exemption of the HRA and the tax benefits from the principal and the interest on the mortgage loan. For example, Ramya works for a company in Delhi and lives in a rented apartment. At the same time, Ramya bought a plot of land in Jaipur for himself – a home loan. Since Ramya is unable to stay at her home in Jaipur as she works in Delhi, she has the right to claim a reduction in HRA and interest on mortgage loans and head.
  • While the house is under construction – If a person takes out a mortgage and buys a house under construction, you will be able to get an HRA deduction. When the construction of the house is complete, that person will be able to receive applications for tax benefits on all interest paid up to the date of completion of the house.
  • When a person has a house but cannot enter – There can be a number of reasons why a person cannot live in a house they have. For example, the place where she works may be far from home. In this case, the landlord may take up rented accommodation near his place of employment. In such a case, the income tax laws allow a person to claim HRA deductions and tax benefits from the principal and interest repaid on the home loan. However, the distance between your home and place of work should be at least 35 km.
  • When the person lives in a rented house and rents his own house – If a person buys a house with a home loan but decides to live in a rented apartment, he rents his own. In those cases, the person has the right to claim the HRA deduction from the rent paid and claim interest on the interest paid on the mortgage on the rented house and place it on the rental income. Note that in this case, a person cannot claim a principal payment benefit under section 80C.

Budget Highlights 2021

Tax-Related Announcements in the 2021 Budget


  • Citizens over the age of 75 with pensions and interest income have now been freed from filing Income Tax Returns.
  • Vacation holiday for affordable housing projects extended for one year until March 31, 2022.
  • The start-up tax holiday has increased for another year until March 31, 2022.
  • Divorce payments to REIT (real estate investments trust) and INVIT (infrastructure investment infrastructure) have been released from TDS.

Tax Checks and File Completing Related:

  • Details of income and interest from banks, post offices, etc. It will be completed first to facilitate the completion of the IT return.
  • The National Court of Appeals for the Income Taxes will be appointed by individual taxpayers.
  • The Dispute Resolution Committee will be made up of small taxpayers.
  • The deadline for reopening income tax cases has been reduced from 6 years to 3 years.

Savings Related:

  • Late donations to EPF by the employer for employees will not be allowed as a deduction from the employer.


  • The budget of Rs. Thirty-five thousand crores have been assigned Covid-19 drugs.


✅ Can we claim HRA and home loans in the same city?

Yes, you can apply for an HRA deduction and tax benefit on a home loan even if you live in the same city where your home is located. This can happen under two circumstances; it is possible that your house is being built, or you live in a rented house and rent your own house. Contact Dialabank to get more help regarding the same at 9878981144.

✅ How do I claim HRA if I stay in my home?

If you live in your own home, an HRA release is not available to you.

✅ What is the maximum House Rent Allowance I can claim?

The highest HRA you can want is a real HRA found. However, the HRA calculation is based on the following:

  • Real HRA found,
  • 50% of salary,
  • Extra rent paid more than 10% of the basic annual salary.

✅ Can I pay rent to my wife and claim the House Rent Allowance?

Yes, you can pay a fine to your wife to claim the HRA deduction in terms of the Income Tax Act 1961.