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80EEA : Additional deduction of interest payment in respect of home loan
Every family owning a house by 2022 is a dream and vision of the government of India. Multiple schemes and tax incentives are being introduced from time to time to encourage people to have their own house. In budget 2019, section 80EEA was introduced to provide an additional benefit of interest payment on affordable housing loans.
What is section 80EEA of income tax?
Section 80EEA covers additional deduction of interest payment on home loan subject to certain conditions. The maximum tax deduction available under this section is Rs. 1,50,000/- over and above deduction available under section 24.This deduction is available from financial year 2019-20.
What is the amount of deduction available u/s 80EEA ?
The amount of deduction available under this section shall be calculated in the following manner :
Actual Interest payment or
Rs. 1,50,000/-
(whichever is lower)
This deduction is available over & above exemption u/s 24 provided other conditions satisfied.
Example : A has taken a home loan during FY 2019-20. The stamp duty value of the house is Rs. 50 lakh. Total interest payment made during the year is Rs. 2,55,000/-. Whether A is eligible to claim deduction under section 80EEA ?
In the above example, stamp duty value of the house exceeds Rs. 45 lakh hence A is not eligible to claim deduction under section 80EEA.
However, A can claim exemption of interest u/s 24 of Rs. 2,00,000/-
Example : A has taken home loan. Given below are the information :
| Total Interest | Loan taken during | Deduction u/s 24 | Deduction u/s 80EE | Deduction u/s 80EEA |
|---|---|---|---|---|
| 4,00,000 | F.Y. 2016-17 | 2,00,000 | 50,000 | Nil |
| 3,00,000 | F.Y. 2019-20 | 2,00,000 | Nil | 1,00,000 |
| 5,00,000 | F.Y. 2019-20 | 2,00,000 | Nil | 1,50,000 |
| 3,00,000 | F.Y. 2018-19 | 2,00,000 | Nil | Nil |
Now, we will discuss what are the other sections under which deduction of interest payment on home loan is available :
Section 24: 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 lakh
- Loan amount should not exceed Rs. 35 lakh
- Loan must be sanctioned between 01-April-2016 to 31-March-2017
Who is eligible to claim deduction u/s 80EEA ?
Deduction under section 80EEA is not available to HUF, AOP, BOI, Partnership firm or any other taxpayer except Individual assessee.
What are the conditions to claim deduction u/s 80EEA ?
Deduction u/s 80EEA is available subject to given below conditions :
- The stamp duty value of residential houses shall be upto Rs. 45 lakh.
- The loan is taken from a financial Institution*.
- The loan has been sanctioned between 01-04-2019 to 31-03-2020.
- Assessee is not claiming any deduction under section 80EE.
- The assessee owns no residential house property on the date of sanction of loan.
Apart from all above conditions, there is one additional condition related to carpet area which is not given under section 80EEA but given in memorandum to the finance bill :
Carpet areas should not exceed 60 square meter in metropolitan cities (Bengaluru, Chennai, Delhi, Noida, 12 Greater Noida, Ghaziabad, Gurgaon, Faridabad,Hyderabad, Kolkata and whole of Mumbai Metropolitan Region or 90 square meter in cities or towns other than metropolitan cities.
What is the difference between Section 80EEA & Section 24 ?
| Section 80EEA | Section 24 |
|---|---|
| Sec- 80EEA does not impose any requirement of possession,as soon as you start your interest payment you can claim for exemption. | To claim deduction u/s 24 you must have possession of your house, on the other hand |
| In the case of section - 80 EEA only allows home loans taken from banks and financial institutions only. | In case loan taken from friends or relatives and interest paid to them is also allowed for exemption u/s 24. |
| Maximum deduction available Rs. 1,50,000/- | Maximum deduction available Rs. 2,00,000/- |
Conditions to claim deduction :
|
No such conditions exist |
What is the difference between Section 80EEA & Section 80EE ?
| Section 80EEA | Section 80EE |
|---|---|
| Stamp duty value of house should be upto Rs. 45 lakh | Value of a house should be Rs 50 lakh or less. |
| Loan should be sanctioned during 01-April-2019 to 31-March-2020 | Loan should be sanctioned during 01-April-2016 to 31-March-2017 |
| Maximum deduction available is Rs. 1,50,000/- | Maximum deduction available is Rs. 50,000/- |
| There is no limit on the value of land.
|
Value of land should not be more than Rs. 35 lakh. |
Meaning of important terms u/s 80EEA
What is the meaning of “ Financial Institution” used u/s 80EEA?- A banking company to which the Banking Regulation Act applies, or
- Any bank or banking institution referred to in section 51 of that Act or
- A housing finance company
What is the meaning of “ Stamp Duty Value” used u/s 80EEA?
Value adopted or assessed or assessable by
- any authority of the Central Government or
- a State Government
for the purpose of payment of stamp duty in respect of immovable property.
What is the meaning of “ carpet area” used u/s 80EEA?
Value adopted or assessed or assessable by
- any authority of the Central Government or
- a State Government
for the purpose of payment of stamp duty in respect of immovable property.
Frequently Asked Questions
Q- Can I claim interest payment deduction on home loan u/s 80EE & 80EEA simultaneously ?
No, one of the conditions claiming deduction u/s 80EEA is that you are not claiming deduction u/s 80EE.
Q- What evidence do I need to submit to my employer while submitting Form 12BB?
Interest certificates from banks may be submitted to the employer.
Q- Can I claim deduction of interest payment on electric vehicle loan also u/s 80EEA ?
No, 80EEA provides deduction for interest payment on home loan. Deduction for interest payment on vehicle loan is available u/s 80EEB.
Q- Can I claim deduction u/s 24 & 80EEA simultaneously ?
Yes, deduction under both the sections can be claimed simultaneously subject to other conditions.
Q- For how many years deduction u/s 80EEA is available ?
Deduction u/s 80EEA can be claimed till repayment of home loan
Q- Can I claim deduction of principal repayment on home loan u/s 80EEA ?
No, 80EEA only provides deduction of interest payments. However, repayment of principal amount on home loan can be claimed u/s 80C upto Rs. 1,50,000/-.
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