The COVID-19 pandemic has pressured many individuals to work at home throughout the lockdowns. With the advantages of the work at home (WFH) tradition seen to each staff (as they might keep at their hometown and minimize the price of staying in costly metro cities) and employers (as they might save on workplace lease, electrical energy, upkeep prices and so on), the WFH goes to remain in India even after the top of the pandemic.
In reality, many firms at the moment are categorising the vacancies into “on website” and “everlasting WFH” segments.
Taking the benefit, many staff – particularly these staying on lease in metro cities – might have shifted to their respective hometowns to save lots of on lease.
Now a few of such staff might consider shopping for a home for them of their hometowns for staying or funding functions.
However can a salaried individual – having workplace in a metro metropolis – purchase a home in hometown by availing a mortgage and declare tax deductions?
“Sure, a salaried individual working in a metro metropolis might declare tax deduction with respect to house mortgage curiosity u/s 24(b) of the Revenue Tax Act, 1961 (hereinafter known as ‘the IT Act’) upto Rs 2,00,000 for a monetary 12 months supplied such home 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 greater deduction on house mortgage curiosity.
“The house mortgage curiosity deduction restrict of Rs 2,00,000 wouldn’t apply if the stated property is a let loose property and the salaried individual might declare your entire curiosity as tax deduction u/s 24(b) of the IT Act,” stated Dr. Surana.
“Furthermore, the principal element of the house mortgage in addition to the stamp obligation worth in reference to buy of the brand new property might be claimed as deduction u/s 80C (cumulative restrict for specified deduction) of the IT Act as much as Rs 1,50,000,” he added.
“One other side which must be considered is claiming the Home Hire Allowance (HRA) exemption u/s 10(13A) of the IT Act learn with Rule 2A of the Revenue Tax Guidelines, 1962, if forming part of his wage,” stated Dr. Surana.
The HRA advantages, nonetheless, shall be topic to minimal of the next:
- Precise HRA acquired
- 50 per cent of wage because the salaried individual resides in a metro metropolis and
- Hire paid in extra of 10 per cent of wage (Wage contains primary wage, dearness allowance, if phrases of employment present so and fee as a share of turnover)
“The salaried individual could possibly declare each the aforementioned exemptions with respect to house mortgage and HRA (if he’s paying lease for keep within the metro metropolis), topic to sure circumstances,” stated Dr. Surana.