Owning a home is of the biggest dreams of any individual. To achieve this milestone, individuals look for availing home loan to build their dream home. Under the objective ‘Housing for All’, the Indian government has now extended the interest deduction allowed for low-cost housing loans. Under the new provision of Section 80EEA of the Income Tax Act, individuals are allowed an interest deduction from AY 2020-21.
What is Section 80EEA of the Income Tax Act?
The Section 80EEA allows to claim a deduction for the interest one pays for housing loan. This section does not cover the construction of residential houses. However, the deduction under section 80EEA is allowed up to ₹1,50,000 per financial year. Also, the individuals can claim this deduction until the home loan is gully repaid.
The older provision of Section 80EE allowed a deduction of up to ₹50,000 for the first-time home-owners on the payable interest of home loan taken from any financial institution.
Qualification to Claim the Deduction
There are certain conditions under which one should fulfil the qualification to claim the deduction under section 80EEA-
- If you want to buy a residential house, you must take out a housing loan from a financial institution or housing finance company
- The loan should be approved between 1st April 2019 and 31st March 2022
- The value of stamp duty of the house property should not exceed ₹45 lakhs
- Individual taxpayers should not be eligible to claim deductions under existing Section 80EE
- Taxpayer should be a first-time home buyer. At the time of loan sanction, the taxpayer should not own any residential property
- If you and your spouse own a property jointly, and both of you make loan payments, then the deduction can be claimed by both of you
- Individuals who are resident or non-resident can take advantage of Section 80EEA
Difference Between Section 80EE and Section 80EEA
|Amount Limit- Deduction
|Up to ₹50,000
|Up to ₹1,50,000
|Only first-time individual homebuyers are eligible.The value of the property must not exceed ₹50 Lakhs.The loan amount must not exceed ₹35 Lakhs.
|Only first-time individual homebuyers are eligible. The carpet area of the property must not exceed 60 square metres (645 sq. ft.) for metro cities (see list of cities above). The carpet area of the property must not exceed 90 square metres (968 sq. ft.) for other towns and cities. The stamp duty paid must be ₹45 Lakhs or less
Section 80EEA and Section 24
Under the Section 24 of the Income Tax Act, homeowners can claim deductions for interest payments up to ₹2 lakhs on their home loan if-
- They or their family lives at the property
- Even the house is vacant
In case, the individual is able to fulfil the conditions of Section 80EEA and Section 24, he/she can claim the benefits under both the sections.
Deduction under section 80EEA is over and above the deduction of Section 24. This means You can first claim the deductions under section 24, then go for additional claim benefits under section 80EEA.
Section 80EEA of the Income Tax Act- FAQs
Section 80EEA was introduced in the Budget 2019. In the Budget 2021, its cover was increased up to March, 2022.
Under section 80EEA of the Income Tax Act, a deduction on interest amount of home loan can be claimed up to ₹1,50,000.
The deduction under section 80EEA can be claimed until you have repaid your home loan.