TaxTMI 
TaxTMI 
an employee submits a declaration/receipts for rent payment for claiming HRA deduction u/s 10(13A) of the Act. he also submits a letter from the close relatives stating the interest charged by them on housing loans given by them to an employee. No nexus can be proved by the employee that whether this loan was actually utilised towards the purchase of house property. my querry is, is it the prime responsibility of an employer to ask for the nexus or a declaration from the employee that this loan is actually a hsg loan. can the employer give deduction of interest on hsg loan u/s 24(b). can this deduction given to an employee who avails personal loan from the banks & merely submits certificate re int payment. I have doubts about the possibility of giving this deduction. pl. discuss & clarify this situation.
Deduction of Interest on housing loan
28 Jan 2010 
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Employer reliance on employee declarations for housing loan interest affects deduction eligibility and TDS responsibility in payroll.
Employers may accept employee declarations or lender certificates as evidence that a loan was taken for house purchase or construction and that interest was paid, provided such reliance is bona fide; where circumstantial evidence or irregularities arise employers should make reasonable enquiries and may require further supporting documents before allowing housing loan interest deduction, due to overlapping TDS obligations and risk of disallowance or fraudulent declarations. (AI Summary)
Employers may accept employee declarations or lender certificates as evidence that a loan was taken for house purchase or construction and that interest was paid, provided such reliance is bona fide; where circumstantial evidence or irregularities arise employers should make reasonable enquiries and may require further supporting documents before allowing housing loan interest deduction, due to overlapping TDS obligations and risk of disallowance or fraudulent declarations. (AI Summary)