(Co-related with Section 80EE & Section 24b of the Income Tax Act)
A new Section 80EEA has been inserted by government to allow for an interest deduction from AY 2020-21 (FY 2019-20). The existing provisions of Section 80EE allow a deduction up to Rs 50,000 for interest paid by first-time home buyers for loan sanctioned from a financial institution between 1 April 2016 and 31 March 2017.
Amount Eligibility
The amount of deduction available under this section shall be calculated in the following manner, whichever is lower: -
Actual Interest payment OR Rs. 1,50,000/-
This deduction is available over & above exemption u/s 24b provided other conditions satisfied.
Therefore, taxpayers can claim a total deduction of Rs 3.50 Lakhs for interest on housing loan, if they meet the conditions of section 80EEA.
Who is eligible?
Only Individual assessee.
Examples
Example1: Mr. Bhaskar has taken a home loan during FY 2019-20. The stamp duty value of the house is Rs. 53lakhs. Total interest payment made during the year is Rs. 3,24,000/-. Whether Bhaskar is eligible to claim deduction under section 80EEA?
Reply: stamp duty value of the house exceeds Rs. 45 lakhs hence Bhaskar is not eligible to claim deduction under section 80EEA.
However, he can claim exemption of interest u/s 24b of Rs. 2,00,000/-
Example2: Mr. Suraj has taken home loan. Given below are the information:
|
S. No. |
Total Interest |
Loan Year |
Deduction u/s 24b |
Deduction u/s 80EE |
Deduction u/s 80EEA |
|
1 |
Rs. 4,50,000 |
FY 2016-17 |
Rs. 2,00,000 |
Rs. 50,000 |
NA |
|
2 |
Rs. 3,00,000 |
FY 2018-19 |
Rs. 2,00,000 |
NA |
NA |
|
3 |
Rs. 3,20,000 |
FY 2019-20 |
Rs. 2,00,000 |
NA |
Rs. 1,20,000 |
|
4 |
Rs. 4,00,000 |
FY 2019-20 |
Rs. 2,00,000 |
NA |
Rs. 1,50,000 |
Reply
Section 24b: Under this section, exemption of interest payment on home loan maximum upto Rs. 2,00,000 under house property income is available subject to certain conditions.
Section 80EE: Deduction on the interest of a home loan under this section is available. The maximum deduction available as per this section is Rs. 50,000/- subject to certain conditions:
- Value of house should be up to Rs. 50 lakhs
- Loan amount should not exceed Rs. 35 lakhs
- Loan must be sanctioned between 01-April-2016 to 31-March-2017
Compiled by: CA Ayush Agarwal and CA Piyush Agarwal
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