This ceiling limit is applicable only if the property is self-occupied. If the property were let, the deduction in respect of interest can be claimed against rental income without any ceiling limit. It may be noted that interest can be claimed against the annual value of nil in case of self-occupied properties.

Rebate under Section 88 can be claimed at the specified percentages.

Query

I have taken a housing loan of Rs 5 lakh and constructed the first floor of a house owned by my father. I now stay in the first floor constructed by me. I pay an EMI of Rs 6,000.

I am a salaried employee getting a HRA. I am also paying rent to my father. Can I get the benefit of exemption under Section 10(13A) in respect of the rent paid and also the benefits in respect of the housing loan repayment and interest thereon?

Sonal Ahuja

Reply

It appears that there is no prohibition in claiming the exemption under Section 10(13A) as also the rebate under Section 88 in respect of the principal repayment of housing loan and the deduction under Section 24 for the interest payment on the housing loan.

The benefit under each of these provisions is independent of the other. The only difficulty that could arise may be because of a possible view that the benefit of exemption under Section 10(13A) will not be available since the rent paid by you is towards land, which is owned by your father. This view however, may not be correct since all persons paying rent will be paying a portion towards use of land on which the house is situated which is also true in your case.

Query

My employer tells me that to get the benefit of exemption under Section 10(13A) one must produce rent receipts and also the rental agreement for proof of having paid rent. I stay with my maternal grand parents. My maternal grand mother owns the house in which I live. If I enter into an agreement with her for payment of rent, the difficulty is that her house tax levied by the Municipal Authorities increases by 10 per cent since the property is taken as let out. How can I get the benefit of exemption under 10(13A) without increasing the burden of house tax?

Gaurav

Reply

It appears that you are only trying to get the benefit of exemption under Section 10(13A) without actually paying rent. You are advised not to resort to such means to reduce your tax liability. If you are actually paying rent to your grand mother may be under the local laws your grand mother will be liable to pay an incremental house tax. It is not advisable for you to try to avoid paying this incremental house tax.

Query

I own a flat in Delhi, which remains locked for the last four years. There is no loan outstanding in respect of this flat. I however, pay property tax to the Municipal Authorities and maintenance charges to the flat owners society. I also own another house. You have through this column indicated that only one house can be treated as self occupied and the annual value taken as nil. You also indicated through this column that the notional value of other properties would have to be offered to tax. How is this notional value to be computed? What deductions can be claimed against this notional value?

Venu

Reply

The notional annual value of the property will have to be taken at the sum for which the property can be reasonably expected to let from year to year. You may note that if more than one house property is self-occupied, you may treat any one of the houses as self occupied. The option to choose the house to be treated as self occupied will be yours. The other property will be treated as let out. Once it is treated as let out all deductions that can be claimed in respect of a let out property can also be claimed in such cases. In your case the property tax will qualify for deduction.

Query

I work for a private company. I have taken a housing loan from my employer for purchasing a flat. I have purchased this flat in my wife's name, who does not have any income. My employer recovers the principal and interest on the loan from my salary. I have been claiming the benefit of deduction in respect of interest and rebate in respect of the principal repayment. Is this correct?

I have now been transferred to a different city. My house is therefore let on rent. The rental income is offered as the income of my wife. Is this correct?

C. Kur

Reply

The claim of interest as a deduction in your hands appears to be in order. However, offering the rental income in your wife's hands does not appear to be correct. From the facts given by you it appears that you are the real owner of the property. Therefore you can claim the tax benefits. On similar lines, the income should also be assessable only in your hands. You have in the query stated that you work in a private company. If you are referring to a private sector company you may be eligible for rebate in respect of the principal repayment.

This will be so, provided you are employed in a public limited company. If you are employed in a private limited company the rebate will not be available to you.

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