Income Tax

Section 80EE – Deduction on Home Loan Interest

This section was first introduced in FY 2013-14 for individual tax payers to benefit against interest payment on home loan. At that time the maximum deduction was INR 1lac. However, this section was amended in FY 2016-17 and the amount of deduction that can be claimed was reduced to INR 50000.

This deduction is over and above the limit of section 80C and section 24 (INR 1.5 lacs and INR 2 lacs respectively).

Thus, an individual tax payer, can claim deduction pertaining to Interest paid on home loan during one financial year. This deduction can be availed every year till the loan is fully repaid by the individual tax payer.

Who can claim?

  • First time home buyers.
  • Only individuals. (Not for HUF, AOP, Company or any other kind of a tax payer.
  • Residents as well as non residents.
  • Single owners or Joint owners paying installments jointly.
  • Borrowers residing in rented accommodation

 

Maximum deduction

A maximum deduction of INR 50000 can be claimed during one financial year. This deduction is over and above the deduction limit of 80c and section 24. So if you fulfill all the criteria under section 80EE, section 80c and section 24, you can benefit from all the deductions.

Eligibility criteria

  • Loan must be sanctioned between 01.04.2016 to 31.03.2017. You should not own any property at that point of time.
  • Loan must be availed from a financial institution or housing finance company. You will not be eligible if you have taken loan from friends or family.
  • Value of the house should be less than INR 50lacs
  • Loan availed must be less than 35lacs.
  • Deduction available only for the interest portion of Home loan.
  • The loan must be availed only for residential purpose and not for commercial usage.

 

Section 80 EEA New introduction In Union Budget 2019

A new section has been introduced in the Union Budget 2019. This section provides tax benefit of interest deduction upto INR 1.5lacs.

Eligibility criteria

  • Loan to be taken under affordable housing
  • Loan should be taken during period 1 April 2019 to 31 March 2020
  • First time home buyers
  • Only individual tax payer. (Not for HUF, AOP, Company or any other kind of a tax payer.
  • The tax payer will not be entitled to deduction under section 80EE.

 

How to claim deduction under section 80EEA

        You can claim this deduction at the time of filing your Income Tax Return.

             Step 1: Add up all the interest paid on home loan during the financial year.

            Step 2: First exhaust the limit of INR 2 lacs under section 24 and then the balance amount up to INR 50000 can be claimed under section 80EE.

 

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