Section 80EEA : Deduction on the Home Loan Interest

In this post, we will dive deep into the deduction under Section 80EEA of Income Tax.

We will cover the following topics in this post:

What is Section 80EEA?

Section 80EEA is an additional deduction for the Individual for paying interest on the home loan. This deduction is available from FY 2019-20. However, HUF, AOP, BOI, Partnership firm, or any other taxpayer is not eligible for the deduction under Section 80EEA.

Section 80EEA is introduced to extend the benefits allowed under Section 80EE for low-cost housing. Deduction u/s 80EEA can be claimed till repayment of home loan.

Under Section 80EEA maximum deduction amount is up to Rs 1,50,000. This deduction is over Section 24 deduction (maximum amount of 2 lakh). Therefore, taxpayers can claim both Section 80EEA and Section 24 (total deduction of Rs 3.5L) at the same time. If you claim 80EEA, then you cannot claim deduction under Section 80EE.

How to claim deduction u/s 80EEA?

There are certain conditions to avail deduction u/s 80EEA:

  • Housing loan should be only taken for buying a residential house property.
  • The loan should be taken from a “financial Institution”.
  • He should be a first-time home buyer. He should not own any house property on the date of sanction of loan.
  • The “stamp duty value” of the house should be Rs. 45 lakh or less.
  • The sanction of the loan should be between 01-04-2019 to 31-03-2020.
  • Assessee is not claiming any deduction under section 80EE.

There is one additional condition on “carpet area”:

  • The carpet area of the property should not exceed 60 sq.m (645 sq.ft) in metropolitan cities which includes Bengaluru, Chennai, Delhi NCR (limited to Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad, Faridabad), Hyderabad, Kolkata, and Mumbai ( whole of Mumbai Metropolitan Region).
  • It should not be above 90 sq.m (968 sq.ft) in cities or towns other than metropolitan cities.
  • This is applicable for affordable housing projects approved on or after 1 September 2019.

Section 80EEA does not specify if you need to be a Resident to claim this benefit. Therefore, both Resident and Non-Resident Indians can claim it.

Section 80EEA also does not specify if the residential house should be self-occupied to claim this benefit. So, people living in rented houses can also claim it.

Individuals who purchase the house jointly or singly can claim this deduction. If a person jointly owns the house with a spouse, and both are paying the loan, then both of them can claim this deduction.

Note:

What is a “Financial Institution” in 80EEA?

  • A banking company to which the Banking Regulation Act applies, or
  • Any banking institution referred to in Section 51 of that Act or
  • A housing finance company

What is “Stamp Duty Value” in 80EEA?

Value adopted/assessed/assessable by:

  • any authority of the Central Government or
  • a State Government

for the purpose of payment of stamp duty in respect of the immovable property.

What is the “carpet area” in 80EEA?

Value adopted/assessed/assessable by:

  • any authority of the Central Government or
  • a State Government

for the purpose of payment of stamp duty in respect of the immovable property.

Difference between Section 80EEA and Section 80EE

Now let us see some of the differences between Section 80EEA and Section 80EE.

Section 80EEA Section 80EE
The stamp duty value of the house should be 45 lakh or less. The value of a house should be 50 lakh or less.
Loan sanctioned period is 01-April-2019 to 31-March-2020, The loan sanctioned period is 01-April-2016 to 31-March-2017.
The maximum deduction amount is Rs. 1,50,000 The maximum deduction amount is Rs. 50,000
There is no limit on the value of the land. The value of land should not be more than 35 lakh.

Difference between Section 80EEA and Section 24

The table below shows the difference between Section 80EEA and Section 24.

Section 80EEA Section 24
You can claim exemption as soon as you start your interest payment. It does not impose any requirement of possession. To claim a deduction you must reside in the house.
Only allows home loans taken from banks and financial institutions. Allows loan taken from any institution
Maximum deduction amount Rs. 1,50,000 Maximum deduction amount Rs. 2,00,000
There are certain conditions to claim the deduction. No conditions to claim the deduction.

With that, we have come to the end of this post on deduction under Section 80EEA.

Share your queries and opinion with us in the comment section below.

Refer more of our blogs: