I have two houses, but stay in Govt. staff quarters. One house  given on rent and the other purchased before 2 years with housing loan for which I claim tax benefit.  Can I club the income from first property and loss (interest paid) from the second house to compute the net loss from house property ( annual HLoan interest of 2nd house- annual rent from 1st house )subject to a ceiling of 1.5 Lakh ?  What is the right way to show in Office for TDS & IT return ?

Thanks

Amount paid as interest on housing loan which is vacant and intended for self occupancy is deductible subject to maximum of Rs. 1.50 Lac a year.  Income from House Property let out is taxable as per actual rent received.

You can report to your employer  net income/loss 'as any other income' to be included in your tax calculation for the purpose of tax deduction at source.