HT Estates - - HTESTATES - Harsh Roongta

I have taken a home loan for which I am tak­ing the tax ben­e­fits of prin­ci­pal and in­ter­est paid. I am a salaried per­son work­ing in a govern­ment depart­ment. HRA is be­ing paid to me. I am re­sid­ing in a rented ac­com­mo­da­tion. Now, my ques­tion is that if I can avail the ben­e­fit of HRA re­bate as I am liv­ing in rented house. If yes, who should I ap­ply to for the same? Is re­bate on prin­ci­pal and in­ter­est paid on home loan as well as HRA re­bate be claimed si­mul­ta­ne­ously? Please pro­vide author­ity for the same.

—Jatin­der The tax ben­e­fits in re­spect of HRA and in­ter­est on home loan are con­tained in two in­de­pen­dent pro­vi­sions of the in­come tax laws. The ben­e­fit in re­spect of in­ter­est on home loan is con­tained in Sec­tion 24(b). For avail­ing de­duc­tion in re­spect of in­ter­est on home loan what is re­quired is that

a) You should be owner of the house

b)You should have bor­rowed money to con­struct or pur­chase the house and

c)You should be in pos­ses­sion of the house. So you can claim the in­ter­est if you sat­isfy all the three con­di­tions. The quan­tum of de­duc­tion will de­pend on whether the property is self­oc­cu­pied or is let out.

The pro­vi­sions for tax ben- efits in re­spect of HRA are con­tained in Sec­tion 10(13A). For avail­ing HRA ben­e­fits what is re­quired is that

a)You are in re­ceipt of HRA from your em­ployer

b)You are pay­ing rent for a house that is oc­cu­pied by you and

c)You do not own the ac­com­mo­da­tion. So the pro­vi­sion of Sec­tion 10( 13A) do not talk about own­ing any property, it only talks about own­ing the property in re­spect of which you are pay­ing the rent.

In case you sat­isfy all these con­di­tions you can claim HRA ben­e­fits. The tax ben­e­fits avail­able, there­fore, are com­pletely sep­a­rate and are not de­pen­dent on each other.

In my opin­ion you need not have any le­gal author­ity for claim­ing both the ben­e­fits as long as you sat­isfy both sets of con­di­tions cu­mu­la­tively and the le­gal pro­vi­sions are am­ply clear I have booked a flat in a golf city project and paid 20% of the project cost as per the 20/80 scheme. The 80% loan has been dis­bursed by the fi­nance com­pany to the builder but I have to start re­pay­ing the loan from next year. Can I sell the flat at this stage by just pay­ing 20%? Can the loan get trans­ferred to the pur­chaser of the flat? Can I sell the flat with­out get­ting it reg­is­tered at this stage? What will be the tax im­pli­ca­tions/ li­a­bil­ity on my part? Tax li­a­bil­ity if any will be short term or long term and the amount? How much money will I re­ceive as­sum­ing the flat cost is ` 5 lakh and 20% paid by me is ` 1 lakh and to­day’s cost is ` 6 lakh? What is the amount of trans­fer fees I will have to pay on sell­ing the flat and to whom will I have to pay it? Will TDS come into ef­fect on this trans­ac­tion?

—MK Tri­pathi You can­not sell the property with­out the con­sent of the lender as they have al­ready dis­bursed the loan amount to the builder. Sec­ond, the sale will also de­pend on the terms and con­di­tions im­posed by the builder in the sale agree­ment.

There is no such thing as trans­fer of loan. You will have to fore­close the ex­ist­ing home loan to be able to sell the property and the buyer will have to ap­ply for a fresh loan on the ba­sis of his el­i­gi­bil­ity.

It is not pos­si­ble for your pur­chaser to get loan amount dis­bursed by the lender with­out the reg­is­tra­tion of the property. It is sur­pris­ing that the home fi­nance com­pany has dis­bursed the loan with­out reg­is­tra­tion of the flat in your favour.

In case you are sell­ing the un­der-con­struc­tion property within a pe­riod of 36 months, the prof­its made on its sale will be treated as short term and will be taxed at the slab rate ap­pli­ca­ble to you. In case it is sold af­ter 36 months, the gains will be long-term and will be taxed at flat rate of 20.36%. How­ever, in case you sell the property af­ter tak­ing pos­ses­sion the pe­riod of 36 months will be counted from the date of you tak­ing the pos­ses­sion and not from the date of book­ing of the flat.

You tax li­a­bil­ity will be the dif­fer­ence be­tween the cost price of the un­der con­struc­tion flat and the price at which you will sell it. Harsh Roongta is CEO, Apna Paisa. He can be reached at ceo@ap­na­

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