Your Taxes

I have a self-occupied house that was purchased with a home loan. I also bought an apartment by taking a second home loan. The flat is currently vacant. How will the changes announced in the Budget affect the amount I can claim as principal and interest deduction? If I have unadjusted losses, can I carry it forward?

Jaivishnu KS

Any amount paid towards repayment of principal amount of housing loan is allowed as a deduction under Section 80C while computing taxable income. Further, the interest paid on housing loan is also allowed as a deduction, beginning from the year possession is taken, under Section 24(b) up to a maximum of ₹2 lakh (in case of self-occupied property) and the actual interest paid (without any limit in case of a let out property). The Budget has not proposed any change in the amount of available deduction. However, it has proposed to restrict the loss from house property which can be set off against incomes under other heads to ₹2 lakh (applicable for FY 2017-18 onwards).

In your case, for FY2016-17, you may claim deduction up to ₹2 lakh for interest paid on housing loan on the self-occupied property and full amount of interest paid on your deemed let-out property. For FY2017-18, the maximum amount of loss which you may set off in respect of both the properties shall be restricted to ₹2 lakh and the balance amount shall be carried forward up to next eight years to be set off only against your income from house property, if any.

I work with a public sector bank and I am availing the facility of leased accommodation. The rent is directly credited to the owner’s account every month by my employer. Is this amount taxable in my hands?

Jatinder Kumar

According to the Income Tax Act, the value of any rent-free accommodation provided by the employer is taxable in the hands of the employees as perquisites under the head salary. The value of rent-free accommodation is determined in the manner prescribed in the Income Tax Rules.

According to the Rules, in case of leased unfurnished accommodation for which rent is being paid by the employer (other than the Central or any State government), the value of taxable perquisite in the hands of the employee will be calculated as follows — 15 per cent of eligible salary (in cities having population exceeding 25 lakh as per 2001 census); or 10 per cent of eligible salary (in cities having population exceeding 10 lakh and up to 25 lakh as per 2001 census); or 7.5 per cent of eligible salary (in other areas).

Where a furnished accommodation is provided, the rental value of the furniture or 10 per cent of the cost of furniture shall also be added to the value of unfurnished accommodation and the resulting value shall be taxable as perquisite. In case any amount is recovered from the employee for rent-free accommodation, then such an amount shall be reduced from the value of perquisite as determined above.

The writer is a practising chartered accountant. Send your queries to taxtalk@thehindu.co.in