Are you planning to purchase a house, plan it to purchase by availing home loan. It will reduce your income tax. Want to know how, read this article fully. Here I have explained how you can claim the home loan interest deduction under section 80EEA.
What is section 80EEA?
Section 80EEA is extension of section 80EE which is only available upto FY 16-17. It is introduced in FY 19-20 with new terms and condition to claim deduction for housing loan interest.
What is the Quantum of deduction under 80EEA?
The maximum deduction amount is Rs. 1,50,000 over and above the deduction of interest under section 24 (b) which is Rs. 2,00,000 in case of self-occupied property and full amount in case of LOP
Who is Eligible for 80EEA?
Individuals whether resident or non-residents who are purchasing house property for the first time [HUF/ companies cannot claim this benefit]
Conditions to avail deduction under section 80EEA
- The stamp duty value of house should be equal to or less then 45 Lakhs
- Loan must be sanction in FY 2019-20
- The individual should not be eligible to claim deduction u/s 80EE
- The person claiming deduction should not hold any residential House property as on the date of sanction of loan
- Limit on size of area
|
Type of city |
Maximum size of area |
|
Metropolitan city [Bengaluru, Chennai, Delhi, Ghaziabad, Faridabad, Gurugram ,Greater Noida, Hyderabad, Kolkata, Mumbai and Noida] |
Size should not exceed 645 sq ft or 60 sq mts |
|
Other city |
Size should not exceed 968 sq ft or 90sq mts |
Important points for 80EEA
- The provisions of 80EEA does not specify the property to be SOP or LOP unlike section 80EE which specifies the house property to be SOP
- Home loan should be from a financial institution (not from relatives or family or friends)
- Loan must be for the purpose of purchase of house property only and not for reconstruction/ repair/maintenance
- Joint owners can separately claim deduction of 1,50,000 each.
- In case of rented property even though there is no limit to claim interest deduction, in virtue of section 71(3A) there is restriction to set-off loss from house property against any other head of income (it is restricted to 2,00,000).
- Section 80EEA does not require possession of the property. Tax payer can claim deduction as soon as he starts paying interest.
Period for which benefit is available under 80EEA
From A.Y 2020-21 till the repayment of loan
Comparison of Section 24(b)/ 80EE / 80EEA
|
Section 24(b) |
Section 80EE |
Section 80EEA |
|
Deduction in case of SOP-2,00,000 LOP- Full amount |
Loans sanctioned in FY 2016-17, Deduction of 50,000 over and above deduction under 24(b) |
Loans sanctioned in FY 2019-21, Deduction of 1,50,000 over and above deduction under 24(b) |
Hope I you have got your queries answere from this artilce, Section 80EEA. Ask me further queries through comments, if any.
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