- What is Deduction under section 80EE?
- Who is Eligible for Deduction Under Section 80EE of Income Tax Act?
- What are the Conditions to Claim Deduction Under Section 80EE?
- What is the Deduction Limit Under Section 80EE for a first-time Homeowner?
- Difference between Section 80EE and 80EEA
- ITR Form Applicable for Section 80EE
What is Deduction under section 80EE?
A taxpayer can claim income tax deduction under section 80EE of the Income Tax Act on interest paid on a home loan taken by a first-time homeowner. Although this deduction was first introduced only for FY 2013-14, it has been reintroduced with effect from FY 2016-17. The total dedication that is available under section 80EE is INR 50,000 per annurm.
Who is Eligible for Deduction Under Section 80EE of Income Tax Act?
Only individuals who are first-time homeowners are eligible to claim deduction under section 80EE. HUF or company or partnership firm can not claim a deduction if they take a loan to acquire a residential house. One needs to note that 80EE deductions can only be claimed on the interest component of home loan and not the principal amount paid towards repayment.
What are the Conditions to Claim Deduction Under Section 80EE?
- An individual is a first time home buyer
- The value of residential houses should not exceed INR 50,00,000
- A loan has to be sanctioned between 1st April 2016 to 31st March 2017
- A loan must be sanctioned by Financial institutions or Housing Finance Company
- Sanctioned loan amount should not exceed INR 35,00,000
- A taxpayer should not own any other residential house on the date of a sanction of a loan
What is the Deduction Limit Under Section 80EE for a first-time Homeowner?
A deduction is allowed up to INR 50,000 for FY 2018-19 (AY 2019-20). There is no limit on a number of years for claiming this deduction if you meet the above conditions. The only limit is that you can not claim deduction u/s 80EE for more than INR 50,000 in a single financial year.
The limit of INR 50,000 is over and above the deduction of INR 2,00,000 allowed for home loan interest u/s 24. So if you satisfy conditions for both section 24 and section 80EE, you can claim a cumulative deduction of INR 2,50,000 on interest paid on the home loan.
Difference between Section 80EE and 80EEA
|Sr. No.||Parameter||Under Section 80EE||Under Section 80EEA|
|1.||Eligibility||All Taxpayers||Only Individual Taxpayers|
|2.||Deduction Amount||INR 50,000||INR 1,50,000|
|3.||Applicability of Section 24||Section 24 can be claimed to provide exemptions up to INR 2,50,000||Section 24 can be claimed to provide exemptions up to INR 3,50,000|
|4.||Date of Loan Sanctioned||Taxpayers get the deduction if their loans are sanctioned during the FY 16-17||Taxpayers get the deduction if their loans are sanctioned on and after FY 19-20|
|5.||Stamp Duty||Stamp duty value of the house should not be more than INR 50 Lakh||Stamp duty value of the house should not exceed INR 45 Lakh|
|6.||Loan Amount||The amount of loan should not exceed INR 35 Lakh||There is no such limit set|
|7.||Condition||The taxpayer has to be a first-time home-buyer||The taxpayer has to be a first time home buyer and shouldn’t have taken any deductions under 80EE|
ITR Form Applicable for Section 80EE
The taxpayer can claim deductions u/s 80EE while filing ITR if all the above-mentioned conditions are full-filled. Individuals/HUFs can claim 80EE in any of the ITR forms, i.e, ITR 1, ITR 2, ITR 3, and ITR 4 depending upon their income sources. The due date for filing ITR is 31st July of the next FY if the tax audit is not applicable.
Yes. As per income tax act, deduction u/s 80EE is allowed for a loan taken to purchase first residential house property. Whether you use it for yourself or let it out on rent is irrelevant. In both the cases, the deduction amount will remain the same as INR 50,000
A home loan repayment certificate/ Interest certificate from a bank is essential to claim this deduction while filing ITR.
Yes, you can claim both deductions under section 80EE and section 80GG simultaneously. This would be possible only when:
a. The assessee is living at rented premises and paying rent for the same.
b. He does not receive any House Rent Allowance (HRA).
c. He has taken a loan for the purchase of the first residential house property.
d. The assessee is not occupying a residential house. A residential house is treated as let out for the purpose of calculating income from house property.
No, under the above mentioned scenario you cannot claim a deduction. A deduction can be claimed only if the wife is a co-borrower in the loan or if your wife makes you the co-owner of the house.
For AY 20-21, INR 50,000 is the total dedication available u/s 80EE provided that the loan is taken in FY 16-17.
Yes, one can claim deductions under both sections at the same time. The 80EE deduction is available over and above the deductions available under section 24.
No, deductions u/s 80EE can only be claimed on a home loan taken for acquisition of residential house property and not for the construction of a house property.