Can I claim tax break if borrowing from a relative?
Can I claim tax break if borrowing from a relative?

Loan For Buying Furniture Cannot Be Claimed As Deduction Under Income-Tax Act

Deduction on interest payable on home loan can be claimed up to Rs 2 lakh for maximum of two self-occupied properties. Gifts made to family members are exempt from tax. You cannot claim HRA if you are staying in your own house

I had taken a home loan two years ago and now I have taken an additional loan on the same property for furniture, renovation, and extension of the house. Can I avail of income tax benefit for both the loans?


Interest payable on money borrowed for acquiring, constructing, repairing, renewing or reconstructing a property can be claimed under Section 24(b) of the Income-tax Act, 1961. The deduction can be claimed up to Rs. 2 lakh in respect of maximum two self-occupied properties taken together in a year. In respect of let-out properties, the full interest can be claimed subject to condition that loss under the head of ‘Income from house property’ can be set off against other income only up to Rs. 2 lakh in the same year. The unabsorbed loss can be carried forward for set-off against house property income in the next eight years.

The benefits in respect of self-occupied property is not available under the new tax regime. Likewise, tax benefit for interest paid for let-out properties is available to the extent of taxable amount under the head “Income from house property” under the new tax regime.

Do note that the loan amount attributable for buying and/or making furniture is not eligible for this deduction. Since both the loans except for the amount attributable to furniture satisfy the conditions, you will be able to claim the interest paid for both the loans subject to the limits mentioned above.


Can I give a gift any number of times in the financial year, or can I give it only once a year? Do I have to go for any documentation for the gift if I am giving it to my parents (senior citizens) or to my married son?


There are no restrictions to the number of times one can give gifts during the year, even to the same person.

Gifts made to your parents and to your children, including married children are not to be treated as income under Section 56(2)(x) of the Income-tax Act, 1961. So, the gifts made by you to them will not have any tax implications for your as well as for them.

A letter stating that the gift is being made to your family member(s) and an acceptance of the gift by the recipient is sufficient for this purpose. You do not need a separate gift deed for this.


I stay in a rented accommodation and I am also getting house rent allowance (HRA) from my employer. Can I claim the HRA exemption under Section 80C and thus save another Rs 1.50 lakh, in addition to the basic exemption of Rs 2.5 lakh?


The exemption for HRA is available in addition to the tax benefit of Rs 1.50 lakh available under Section 80C. However, both these benefits are not available under the new tax regime.

The tax benefit for HRA is available to a person who is in receipt of HRA and is paying rent.

The exemption available for HRA under Section 10(13A) will be least of the following:

a) 40% of salary (50% for Delhi, Mumbai, Kolkata, and Chennai).

b) HRA for the period the house is occupied by the employee.

c) The excess of rent paid over 10% of the salary.

An employee living in his own house, or, where he does not pay any rent, is not eligible for this exemption.

The author is a tax and investment expert

(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)

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