You Can Claim Deduction Under Section 80C For Property Outside India Too

I have a residential house abroad on which I am paying my home loan installment in India. I am a salaried employee and I am working in India. Can I claim deduction under Section 80C of the Income-tax Act, 1961 for home loan repayment?

Answer: The benefit under Section 80C for home loan repayment is available in respect of any residential house property, even for those situated outside India.

However, you can claim deduction under Section 80C for such property outside India only if the loan has been obtained from specified institutions. Your eligibility to claim deductions under Section 80C for home loan repayment will depend on your residential status under the income tax laws. In case you are resident of India for the purpose of income tax laws, you will be able to claim the deduction, as your global income, including income from the house property outside India, which will be taxable in India.

Both my spouse and I are working. We bought a residential house in our joint names for which we have taken a home loan. All the installments for the home loan are being paid from my account only. Can we both claim the deduction for the home loan under Sections 80C and 24b of the Income-tax Act, 1961?

Answer: For claiming tax benefits in respect of a home loan, you are required to satisfy three conditions. First, you should be the owner of the property. The ownership may be single or joint. Second, you should be the borrower to the home loan either singly or jointly, and lastly, you should be actually servicing the home loan.

As the house is held in joint names, the bank would have made both of you as co-borrowers for the home loan. So, though both you are co-owners as well as co-borrowers, but as the home loan is being serviced by you alone, only you can claim the tax benefits in respect of that home loan. Your wife cannot claim deduction under Sections 24(b) and 80C in respect of the home loan even though she is a co-owner and a co borrower, as she is not servicing the loan.

Is it necessary to submit bills for claiming leave travel allowance (LTA)? What will happen if I fail to submit the documents to my employer?

Answer: Yes, you will have to submit the documentary evidence for claiming exemption in respect of LTA. Under Section 192 (2D) of the Income-tax Act, 1961, it is the responsibility of the employer to obtain and verify the documents before granting any tax relief to the employee.

So, your employer will insist for submission of the documents for allowing you the LTA exemption. In case you have failed to submit the documents, you can claim it while filing your income tax return (ITR), but there is high probability that you might receive a notice from income tax department for your ITR being at variance with Form no, 16 issued by your employer, as LTA would have been shown taxable in Form No 16. You may be asked to produce the relevant documents as and when the income tax department picks up your case for detailed scrutiny.

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.)