Living in a rented house, can I claim House Rent Allowance (HRA)? Thinking of buying a house with a home loan and renting it out? Can full interest on the loan be exempted from income tax? Can I continue to claim exemption for HRA from the tax?
As per the IT Act, interest on house loan can be exempted from tax up to Rs.2 lakh per annum under section 24 (b). This applies if the loaned is residing in the house. If it is rented out, the entire interest can be claimed in full under Section 24 (b). Although it is permissible to claim full interest in respect of a rented house, there is a limit of Rs.2 lakh under ‘income from house property’. It can be set off under other income in the same year. The amount not taken in that year can be set off in the next eight years under house property income. And when it comes to the tax benefit related to HRA, you can claim HRA even if you own any residential property as long as you are paying rent in respect of the house you are staying in or not owning.
Have you been living overseas for many years? Have you invested Rs.50 lakhs in mutual funds in India from NNRVO account? Now redeem it all and invest the money in a Foreign Currency Non Resident (F CNR) account? Also, can money be transferred from NRO account to NRE account?
Redemption proceeds of investment in mutual funds will be credited to the NRO account only as investments are made from the NRO account. RBI has imposed certain restrictions on transferring funds from NRO account to NRE account or sending funds abroad. As per RBI guidelines, an NRI can transfer a maximum of ten lakh dollars from your NRO account to NRE account in a financial year without any specific permission from RBI. Now you do not need specific permission as the amount to be transferred does not exceed ten million dollars.
However, for transfer of amount from NRO account to NRE account, a certificate from a Chartered Accountant confirming payment of taxes on the amount transferred from NNRO account to NNRE account is required. Application for such transfer should be made in Form No. 15CA as this Certificate number is mentioned in form No 15CB. There is no additional tax liability as the tax is deducted by the mutual fund house.
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