80 EEA – Deduction for Interest on Affordable Housing Loan :
Section 80EEA has been introduced to further extend the benefits allowed under Section 80EE for low-cost housing. Earlier, Section 80EE had been amended occasionally to allow a deduction for interest paid on housing loans for FY 2013-14, FY 2014-15, and FY 2016-17.
Overview of Section 80EEA:
Section 80EEA of the Income Tax Act provides a deduction of up to ₹1.5 lakh on the interest paid for home loans sanctioned between April 1, 2019, and March 31, 2023, for properties with a stamp duty value not exceeding ₹45 lakhs. This deduction is in addition to the benefits under Section 24(b).
- Section 80EEA is applicable to Both Residents and Non Residents.
- Deduction can be claimed only when 80EE is not availed.
- It can be availed only for Residential House property and not for commercial plots or buildings.
- Amount of deduction that can be claimed would be restricted to Rs.1,50,000 or the actual amount of interest whichever is lower.
Conditions for claiming the deduction
- Housing loan must be taken from a financial institution(a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies, or any bank or banking institution referred to in section 51 of that Act) or a housing finance company(a public company formed or registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes).
- The loan should be sanctioned during the period 1st April 2019 and 31st March 2022.
- Stamp duty value of the house property should be Rs 45 lakh or less.
- The individual taxpayer should not be eligible to claim a deduction under the existing Section 80EE.
- The taxpayer should be a first-time home buyer. The taxpayer should not own any residential house property as of the date of sanction of the loan.
Conditions with respect to the carpet area of the house property. These conditions have been specified in the memorandum to the finance bill, but not mentioned in section 80EEA:
- The carpet area of the house property should not exceed 60 square meter (645 sq ft) in metropolitan cities of Bengaluru, Chennai, Delhi National Capital Region (limited to New Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region)
- Carpet area should not exceed 90 square meter (968 sq ft) in any other cities or towns.
- Further, this definition will be effective for affordable real estate projects approved on or after 1 September 2019
- The section does not specify if you need to be a resident to be able to claim this benefit. Therefore, it can be concluded that both Resident and Non-Resident Indians can claim this deduction.
As per the Income Tax Act, Section 80EEA is designed to encourage first-time homebuyers by offering deductions on home loan interest. If you fulfill the eligibility criteria, you can take advantage of this provision to reduce your taxable income and enjoy the benefits provided by the section.
Before claiming deduction under this section, please make sure you satisfy all the eligibility criteria and also you have sufficient documentation for all the claim under this ection being made. This will ensure proper tax compliance and your peace of mind. Also consider taking a professional advice since the tax laws are being updated frequently and the applicablity of the particular section shall be ensured for the particular Assessment year for which you are claiming the same. Please refer to Income-tax website for the current applicable provision.
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