Section 80EEA of The Income Tax Act, 1961

Section 80EEA of The Income Tax Act, 1961

Section 80EEA of The Income Tax Act, 1961: Deduction for Interest on Home Loan for Affordable Housing Property

Section 80EEA
Section 80EEA of the Income Tax Act, 1961, effective from April 1, 2020, permits a deduction for interest on loans taken for certain house properties. The maximum limit for 80EEA exemption is INR 1,50,000 for a particular financial year. The deduction is allowed from the date of loan sanction and continues through all subsequent assessment years until the loan is fully repaid.

Homebuyers can claim an additional deduction of INR 1,50,000 over and above the normal deduction of INR 2,00,000 allowed under Section 24 of the Act. This means that an assessee can claim a total deduction of INR 3,50,000 in a given financial year by combining the benefits of both sections i.e. Section 24 and Section 80EEA.

Conditions for Claiming Deduction under Section 80EEA-

The following terms and conditions must be met to claim a deduction under Section 80EEA:

1- Only first-time homebuyers can claim deduction under Section 80EEA. This means that the assessee should not own any residential house property on the date the loan is sanctioned.

2- A deduction u/s 80EEA can be claimed upto INR 1,50,000 from the net taxable income.

3- If the property is located in one of the following metro cities: Mumbai, Hyderabad, Bangalore, Kolkata, Chennai, or Delhi NCR (including Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, and Faridabad), the carpet area should not exceed 60 square meters i.e. 645 square feet.

4- For properties in any other town or city in the country, the carpet area cannot exceed 90 square meters (968 square feet).

5- The stamp duty of the affordable housing property must be Rs. 40 Lakhs or less.

6- The affordable housing loan must be obtained in the F.Y. 2019-2020 or F.Y. 2020-2021 as per bank loan letter.

Eligibility Criteria for Claiming Deduction under Section 80EEA-

Following assessees are allowed to claim deduction under Section 80EEA:

1- Only individual borrowers are eligible to claim deduction under Section 80EEA for property purchased either singly or jointly.
2- Section 80EEA does not apply to Association of Persons (AOPs), Hindu Undivided Families (HUFs), trusts, or companies.
3- The taxpayer is not required to reside in the property to be eligible for claiming a deduction under Section 80EEA.