Budget 2016: Incentives for Promoting Housing for All

The existing provisions of section 80EE provide a deduction of up to 1 lakh rupees in respect of interest paid on loan by an individual for acquisition of a residential house property. This benefit is available for the two assessment years beginning on the 1st day of April 2014 and on the 1st day of April 2015.

In furtherance of the goal of the Government of providing ‘housing for all’, it is proposed to incentivise first-home buyers availing home loans, by providing additional deduction under section 80EE in respect of interest on loan taken for residential house property from any financial institution up to Rs. 50,000. This incentive is proposed to be extended to a house property of a value less than fifty lakhs rupees in respect of which a loan of an amount not exceeding thirty five lakh rupees has been sanctioned during the period from the 1st day of April, 2016 to the 31st day of March, 2017. It is also proposed to extend the benefit of deduction till the repayment of loan continues.

The deduction under section 80EE is over and above the limit of Rs 2,00,000 provided for a self-occupied property under section 24 of the Act.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent assessment years.

Clause 37 of the Finance Bill 2016

Clause 37 of the Bill seeks to substitute section 80EE of the Income-tax Act relating to deduction in respect of interest on loan taken for residential house property.

The provisions contained in the existing section provides for deduction upto one lakh rupees in respect of interest payable on loan taken by an assessee being an individual from any financial institution for the purpose of acquisition of a residential property. This benefit was available during the assessment years begining on the 1st day of April, 2014 and ending on the 31st day of March, 2016.

It is proposed to substitute the said section so as to provide a deduction for those who buy residential house property for the first time, in respect of interest on loan taken from any financial institution upto fifty thousand rupees subject to other conditions specified therein. It is proposed to extend the benefit of deduction till repayment of loan continues.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation assessment year 2017-2018 and subsequent years.

Substitution of new section for section 80EE. Deduction in respect of interest on loan taken for residential house property.

36.    For section 80EE of the Income-tax Act, the following section shall be substituted with effect from the 1st day of April, 2017, namely:—

 ‘80EE. (1) In computing the total income of an assessee, being an individual, there shall be     45
deducted, in accordance with and subject to the provisions of this section, interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential property.

(2) The deduction under sub-section (1) shall not exceed fifty thousand rupees and shall be allowed in computing the total income of the individual for the assessment year beginning on the 1st day of April, 2017 and subsequent assessment years.

(3) The deduction under sub-section (1) shall be subject to the following conditions, namely:—

(i)  the loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2016 and ending on the 31st day of March, 2017;

(ii)   the amount of loan sanctioned for acquisition of the residential house property does not  exceed thirty-five lakh rupees;

(iii)  the value of residential house property does not exceed fifty lakh rupees;

(iv) the assessee does not own any residential house property on the date of sanction of loan.

(4) Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other assessment year.

(5) For the purposes of this section,—

(a) “financial institution” means a banking company to which the Banking Regulation Act, 1949 applies, or any bank or banking institution referred to in section 51 of that Act or a housing finance company;

(b) “housing finance company” means 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.’.

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21 responses to “S. 80EE Additional Deduction of Rs. 50000 on Home Loan Interest”

  1. Anil Jandyal says:

    I took loan from my friend and paid Rs 36000/- interest every year. can I claim interest under sec 80EE.

    please advice me…

  2. arya says:

    Sir ,
    I have taken home loan rs. 15lakh in oct 2016 for purchasing a flat In financial year 2017-18 interest component is 129234 and principal component is 38903 . N value of my house is less than 50 lakh . Can I claim the benifit of 80ee ?

  3. C V RAMANA RAO says:

    I have taken loan of Rs. 27 Lakhs from canfin home loans for purchase of Flat, will am be to take a deduction of 50,000 under 80EE, can some one confirm on the this

  4. Dinesh tripathi says:

    Sir ,
    I have taken home loan rs. 1350000 in July 2016 for construction of a house . Construction completed in march 2017 . In this financial year 2017-18 interest component is 123464 and principal component is 37303 . Nvalue of my house is less than 50 lakh . Can I claim the benifit of 80ee ?

  5. G.Venkatesham says:

    sir
    home loan is rs 33,80,000=00 in 2016-17 FY sanctioned house value is 45 lacs
    may i claim 50,000 rs in 2017-18 u/s80EE
    PLEASE answer

  6. MAYANK BHATT says:

    Hello sir,I am taking loan in March 2018.I am eligible for section 80EE or not.please suggest.

  7. karanvemra says:

    how much claim can be avail in section 80c and section 24

  8. Rohit Pandey says:

    Hi,

    kindly advise on what loan sanctioned period should be for claiming 80EE if we are claiming it in F.Y. 2017-18.

  9. Prasad says:

    Sir, I took loan in16-17 for construction of house in own plot. Can I avail tax deduction u/s 80ee ? All other conditions are fulfilled u/s 80ee.

  10. J S NAILWAL says:

    Sir
    I have taken housing loan from LIC for the construction of house, in my own plot. Can I claim for the rebate of interest u/s 80EE for the construction of house ?I would like to mention here that I complete all other conditions for the same. Please reply soon as early as possible
    regards

  11. smita kariwadekar says:

    my homeloan was sanctioned in august 2016 and is under 35L and propery value is as per the limit specfied..however, the property is still under construction..can i claim the deduction of interest paid of rs 50000 ?

  12. Manjunatha says:

    Hi, i have bought a flat & registered on Dec 1, 2015 and i have taken 21 lac loan, will am be to take a deduction of 50K under 80EE, can some one confirm on the this

  13. PUNEET AGGARWAL says:

    Purchased property in the name of spouse and loan sanctioned in both name i.e. husband and spouse, payment of loan and interest made by husband . Who is eligible to claim deduction u/s 80 EE ?

  14. P.Barman says:

    Value of Flat : 49,60,000.00+ST(3.75%)+VAT(1%)
    Parking : 2,50,000.00+ST(3.75%)+VAT(1%)
    Plus registration & other misc charges.
    Loan Amount Rs 35,00,000.00

    Kindly clarify me whether I can claim deduction under section 80 EE.
    I have a confusion on whether Value of residential property inclusive of Service Tax, VAT, Parking Fee & other statutory dues or not.

  15. Vineet Kumar says:

    My home loan was sanctioned for 355000 for an under construction property but during the current financial year 3349000 was disbursed and rest amount will be disbursed at the last demand of the builder at the time o possession in April 2017 .Since Amount disbursed is less than 35 lakh in financial year 2016-17 ,am i eligible to get 50000 rebate .Loan sanctioned on 12 April 2016

  16. Vineet Kumar says:

    My home loan was sanctioned for 355000 for an under construction property but during the current financial year 3349000 was disbursed and rest amount will be disbursed at the last demand of the builder at the time o possession in April 2017 .Since Amount disbursed is less than 35 lakh in financial year 2016-17 ,am i eligible to get 50000 rebate .Loan sanctioned in 12 April 2016

    • Amit dokania says:

      Here the acts says that the amount of loan sanctioned for acquisition of the residential house property does not exceed thirty-five lakh rupees; and your loan sanction amount exceeds the above mentioned limit..so you are not eligible to claim deduction under section 80EE.

  17. M sood says:

    No; only registration charges incurred for the residential property qualify for deduction U/s 80C

  18. Sourav Kashyap says:

    if a person buying residental property and pay home loan interest above 300000 can they avial deduction in Sec 80EE and how much amt. claim?

  19. srikanth raghavan says:

    Can we claim tax deduction for the amount paid as brokerage while buying apartment?

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