Section 80EEA of IT Act: Additional deduction of interest payment in respect of housing loan

CA Piyush Agarwal | Last updated: 25 January 2022

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Quick Summary

Section 80EEA of the Income Tax Act offers an additional deduction for interest paid on housing loans, available from Assessment Year 2020-21. This deduction is capped at Rs 1,50,000 or the actual interest paid, whichever is lower. Crucially, this benefit is available over and above the deduction under Section 24b, potentially allowing taxpayers to claim a total of Rs 3.5 Lakhs in interest deductions.

(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.

Section 80EEA: Extra Housing Loan Interest Deduction

Who is eligible?

Only Individual assessee.

Conditions to claim

Difference between Section 80EEA & Section 24b

Other Points

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: