As we all are aware that the term HRA stands for House Rent Allowance. Generally every employee receives a HRA from their employers as part of his salary package, in accordance with terms and conditions of employment.

HRA is given to meet the cost of a rented house taken by the employee for his stay. Income Tax Act allows for deduction in respect of HRA paid to employees so that salaried assesse can get some relief in terms of Tax Savings.

In this article I am here to clear one query raised by one of my reader, since this might be a doubt in the mind of many other readers also.

Query:

I purchased a flat in December 2018 and started paying the pre-EMI from February 2019 on the housing loan. I was paying the pre-EMI until September 2019 and started paying the EMI from October 2019.

The construction was completed in January 2020 but I can get the flat registered in my name only in March. I am now staying in a rented house.

Can I get exemption u/s 10(13A) for the house rent allowance as well as for the pre-EMI interest and EMI? – Sharavanan B.

Reply:

If you have receipts of house rent allowance and if you are paying rent, exemption u/s 10(13A) will be available. Section 24, which allows a deduction in respect of interest on capital borrowed for purchase/construction of a house property, permits this deduction for the interest that relates to the previous year in which the property is acquired or constructed.

The interest prior to the year when the property was acquired or constructed is to be claimed in five equal annual instalments beginning from the year when the property is purchased or acquired.

In your case, the interest for February and March 2019 relate to the year before the year when the property was acquired.

The interest of these two months will have to be claimed in five equal annual instalments beginning from Financial year 2019-20 (assessment year 2020-21). The interest for April 2019 to September 2019 and also the interest from October 2019 to March 2020 can be claimed in full in 2019-20 (assessment year 2020-21).

Republished with Amendments

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