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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.
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.
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:
Deduction under section 80EEA is not available to HUF, AOP, BOI, Partnership firm or any other taxpayer except Individual assessee.
Deduction u/s 80EEA is available subject to given below conditions :
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.
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 |
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. |
Value adopted or assessed or assessable by
for the purpose of payment of stamp duty in respect of immovable property.
Value adopted or assessed or assessable by
for the purpose of payment of stamp duty in respect of immovable property.
No, one of the conditions claiming deduction u/s 80EEA is that you are not claiming deduction u/s 80EE.
Interest certificates from banks may be submitted to the employer.
No, 80EEA provides deduction for interest payment on home loan. Deduction for interest payment on vehicle loan is available u/s 80EEB.
Yes, deduction under both the sections can be claimed simultaneously subject to other conditions.
Deduction u/s 80EEA can be claimed till repayment of home loan
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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