Explore all Credit Cards
Premium Metal
0% Forex & Travel
Lifetime Free
10X Rewards
UPI Cards
Fuel & Utility
Showstopper
Credit Builder
More
Customer Support
Explore NRI Banking
NRI Savings Account
NRI Fixed Deposit
FOREX Solutions
Transfer to NRE
Markets & Beyond
Customer Support
Explore Startup Solutions
Explore Corporate Banking
Corporate Account
Cash Management Services
Supply Chain Finance
Corporate Lending
Treasury
NBFC Financing
Customer Support
BRAVO (Auto Sweep)
Explore Business Banking
MSME Accounts
Trade Services
MSME Loan
MSME Solutions
Debit Card
Offers
Customer Support
Explore Gift City
About Us
Investors
ESG

FOLLOW US ON :

Download Now

  • App Store
  • Google Play

Notifications

  • As per amendment in the Income Tax Rules, PAN or Aadhaar are to be mandatorily quoted for cash deposit or withdrawal aggregating to Rupees twenty lakhs or more in a FY. Please update your PAN or Aadhaar. Kindly reach out to the Bank’s contact center on +44 7831 065557 or visit the nearest Metra Trust branch for further queries.

  • Activate your Credit Card within minutes and enjoy unlimited benefits

    Know More

  • One FASTag, three payments:Toll, fuel and parking

    The only FASTag with triple benefits

    Apply Now

FinFIRST Blogs

Credit Card Savings Account Personal Loan Home Loan Car Loan Education Loan Two Wheeler Loan NRI Business Banking Fixed Deposit Finance Beyond Banking MyFIRST Mobile Banking Startup Banking Investments Salary Account
Apply Now

Home Loan

Home Loan vs HRA: Which one allows you to save more tax?

Summary: In most cases, a home loan will give you a more significant tax benefit than HRA in terms of IT deductions.

16 Nov 2021 by Team FinFIRST
Home Loan vs HRA: Which one allows you to save more tax?

Download Now

In most cases, a home loan will give you a more significant tax benefit than HRA in terms of IT deductions


Paying off a home loan and house rent allowance (HRA) come with some tax benefits that should be considered before deciding whether to buy or rent a house. The comparative advantages of the two depend on several factors such as income and rent amounts, city of residence, amount of home loan, tenure and rate of interest, etc. It helps to understand the basic computational rules for the income tax deduction in both cases to make an informed choice:

READ MORE

Stamp Duty
What you must know about stamp duty and registration charges?
What is RERA Act
The RERA and its value to real estate investors

 

House Rent Allowance (HRA)


HRA is a component of salary. Salaried taxpayers who live in rented accommodation can claim an income tax deduction in the form of HRA. The amount of HRA deduction allowed depends on the location of residence, HRA granted by the employer, actual rent paid by the tenant, and their basic salary. The allowable HRA deduction according to the Income Tax Act is the least of the following three amounts:

  • HRA granted by the employer
  • 50% of basic salary (in case of metro cities) or 40% of the basic salary (non-metro cities)
  • Actual rent paid less 10% of basic salary

This can be best illustrated using an example: Mr A lives in Mumbai and earns an annual basic salary of Rs 6,00,000 and an annual HRA of Rs 1,80,000. He pays an annual rent of Rs 3,60,000. The above three amounts for him will work out to:

  • HRA granted: Rs 1,80,000
  • 50% of basic salary: Rs 3,00,000
  • Rent paid minus 10% of basic salary: 3,60,000 – 60,000 = Rs 3,00,000

In this case, Mr A will be entitled to an HRA deduction of Rs 1,80,000 for income tax purposes. This deduction can be set off against income from salary or any other type of income. 

Metra Trust provides home loans with interest rates as low as 6.90% and tenures as long as 30 years to facilitate homeownership for all. Our home loan application and approval process are entirely digital and paperless, ensuring that your home buying experience is smooth from start to end.

Home Loan Deductions


The Income Tax Act allows deductions for home buyers if they have taken on a home loan. Interest paid on a home loan is income-deductible up to Rs 2,00,000 per year. Additionally, principal repayment made towards a housing loan (including the amount expended on registration charges) is deductible up to Rs 1,50,000 per year. So, a property owner occupying the house they bought using a home loan can claim up to Rs 3,50,000 per annum as income tax deductions.

Except for individuals with very high basic salary, HRA, and rent expenditure, a home loan is likely to provide more benefit from an income tax perspective. After all, buying a home leaves you with an asset. Metra Trust provides home loans through instant loan app with interest rates as low as 6.90% and tenures as long as 30 years to facilitate homeownership for all. Our home loan application and approval process are entirely digital and paperless, ensuring that your home buying experience is smooth from start to end.

 

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Metra Trust or its affiliates to any licensing or registration requirements. Metra Trust shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.metratrust.com for latest updates.

Prev

How to use Home Loan Calculator to Calculate Loan EMI
Next

Mortgage Loan - What is a Mortgage, Mortgage Types and More

Related Products

Related Articles

Download Metra Trust App

Tags

You might also be interested in:

Savings Account

Savings Account
Personal Loan

Personal Loan
Credit Card

Credit Card
Home Loan

Home Loan
Two Wheeler Loan

Two Wheeler Loan