Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
When both are allowed
You rent in your work city and own a home in another city, or your owned house is genuinely let out. Both claims are legitimate when the facts support them.
Watch-outs
Claiming HRA and a self-occupied home loan in the same city invites questions unless there’s a genuine reason. Keep rent receipts and the loan statement. Old regime only.
How each benefit is computed
The two benefits are computed independently, which is why both can apply. HRA exemption under Section 10(13A) is the least of three figures: the actual HRA received, the rent paid less 10% of salary, or 50% of salary in a metro (40% elsewhere) — so it depends on the real rent paid, and rent above ₹1 lakh a year needs the landlord’s PAN. The home-loan benefit is separate: interest on a let-out property is deductible under Section 24(b) (with the set-off against other income capped at ₹2 lakh a year and the rest carried forward), and on a self-occupied house up to ₹2 lakh; the principal counts under 80C. The genuine cases are clear — you rent in the city you work in while your owned house is in another city, or is genuinely let out. Claiming HRA while servicing a self-occupied loan in the same city draws questions unless there’s a real reason (a large family home, a long commute), so keep rent receipts, the rent agreement and the loan interest certificate to support it. All of this is old-regime only; the new regime allows neither the HRA exemption nor the self-occupied interest deduction. Confirm the current limits per the Finance Act.