For me a Home is a safe place where I can have the things and people I love at one place. It’s a place where I dream, sing, and rest from the stress outside. Its refuge from our busy lives and connect us with the people who love us the most. Buying our own home is like a dream come true for  most of us. Those who do not have there own have the dream to own a house at there own. But do you know that buying an house can also provides you tax benefits Under section 80C of the Income Tax Act,1961? In this article we are discussing the Qualifying Amount, conditions, Limits subject to which we are eligible for deduction U/s. 80C for Investment in Residential House Property.

DEDUCTIONS UNDER SECTION 80C IN RELATION TO INVESTMENT IN NEW RESIDENTIAL HOUSE PROPERTY

ID-100140366Deduction under section 80C of the Income tax Act is available for investment in house property subject to the satisfaction of the conditions of that section in regard to qualifying amounts in the following circumstances to the individuals/Hindu undivided families.

Payments made towards the cost of purchase/construction of new residential house property during the previous year are eligible for deduction under section 80C. The following payments qualify for deduction:-

a. any installment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis; or

b. any installment or part payment of the amount due to any company or cooperative society of which the assessee is a shareholder or member towards the cost of the house property allotted to him (it is not applicable if the assessee is not a shareholder or member of the company/cooperative society which provided house to the assessee); or

c. repayment of the amount borrowed by the assessee from‑

i. the Central Government or any State Government, or

ii. any bank, including a cooperative bank, or

iii. the Life Insurance Corporation of India, or

iv. the National Housing Bank, or

v. any public company formed and 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 which is eligible for deduction under section 36(1) (viii), or

vi. any company in which the public are substantially interest or any cooperative society, where such company or cooperative society is engaged in the business of financing the construction of houses, or

vii. the assessee’s employer where such employer is an authority or a board or a corporation or any other body established or constituted under a Central or State Act, or

viii. the assessee’s employer where such employer is a public company or public sector company, or a university established by law or a college affiliated to such university or a local authority or a cooperative society;

d. stamp duty, registration fee and other expenses for the purpose of transfer of such house property to the assessee.

investment in property

Payments not qualified for the purpose of deduction under section 80C :

a. the admission fee, cost of the share and initial deposit which a shareholder of a company or a member of a cooperative society has to pay for becoming such shareholder or member; or

b. the cost of any addition or alteration to, or renovation or repair of, the house property which is carried out after issue of the completion certificate in respect of the house property by the authority competent to issue such certificate or after the house property (or any part thereof) has either been occupied by the assessee or any other person on his behalf or been let out; or
c. any expenditure in respect of which deduction is allowable under the provisions of section 24.

Qualifying Limit for deduction under section 80C

Section 80C provides that in computing the total income of an assessee, deduction shall be provided in respect of various payments/investments made as included in the aforesaid Section subject to a ceiling of Rs. 1 lakh (Increased to Rs. 1.50 Lakh from A.Y. 2015-16) on the aggregate amount of such payments/investments.

Time Period for Investment or When deduction under section 80C can be revoked

Section 80C(5) stipulates that in case an assessee transfers the house property referred to above before the expiry of five years from the end of the financial year in which possession of such property is obtained by him, or receives back, whether by way of refund or otherwise, any sum specified above, then no deduction shall be allowed with reference to any of the sums referred to above and the aggregate amount of deductions of income already allowed in respect of the previous year or years shall be deemed to be the income of the assessee of such previous year and shall be liable to tax in the assessment year relevant to such previous year.

Image courtesy of Danilo Rizzuti at FreeDigitalPhotos.net

(Updated on 21.06.2018)

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Company: Taxguru / Sandeep Kanoi & Associates
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24 Comments

  1. vikas girame says:

    Dear Sir
    If i pay an installment in 2018-19 for purchase a flat & agreement done in 19-20 can we take credit for installment in 2018-19 of rs 300000 eligible for Ded 1.50 & stamp duty benefit in 19-20

  2. ahamed says:

    I have purchased a property and paid stamp duty and registration charges. Whether these charges can be included in 80c deductions eventhough i have not planned to build a house.

  3. Vipin Jain says:

    Dear Sir, Yamuna expressway has allotted me a flat.. under which I opted to pay in installments which includes interest as well. Please suggest if get deduction under section 80C for Principal amount and further after taking possession of that flat, can I take deduction for interest deposited.
    With Regards
    Vipin Jain

  4. Shipreeta Verma says:

    I had booked a flat with an initial deposit of Rs. 30,000 (self financing) in November 2015,this amount is a part of the total price of the house, the registration for the house would however e done in April 2016. Can I claim a tax rebate for this Rs. 30,000 under 80C for the year 2015-’16

  5. Sheetal says:

    Is the Service tax paid to builder for an under construction property, claimable for income tax deductions. Possession is in next year financial year.

  6. M.K.Shrivastava says:

    1.Whether the amount paid to a private builder(cost of flat,stamp duty,registration,vat,service tax etc)qualifies for deduction under Income Tax Act.
    2.Whether amount deposited in recurring deposit account for 5 years or more qualifies for deduction under income tax Act.
    3.How the once lifetime contribution of Rs. 60000/= made to CGHS (at the time of retierment of a Central Govt. Officer) treated for deduction under Income tax act.Whether the entire amount is adjusted in one year or it can be adjusted in 3 instalments of Rs, 20,000/= each

  7. ramana says:

    I have purchased a flat in Hyd for my residence in 2010. Builder handed over flat in 2012 Nov. From 2013 I am staying in the flat. In 2014 Nov,I incurred about 30,000 INR for repair of bathroom leakages, colouring etc. Please let me know whether I can claim the above amount under IT exemption in 2014-15?

  8. GOKULNATH says:

    I BOUGHT VACANT LAND FOR LY JAN’15 BY WAY OF PERSONAL LOAN.

    CAN I CLAIM FOR STAMP DUTY CHARGES AS A DEDUCTION US 80C.

    PLEASE SUGGEST ME.

    GOKULNATH.

  9. Naveen Sethi says:

    I purchased a house from YEIDA on installment. Will i get any rebate in income tax on the installment & interest paid or principal paid to development authority.

  10. SANDY says:

    I HAVE PURCHASE RESIDENTIAL PROPERTY. I PAID FOR REGISTRATION AND STAMP DUTY IN FEB 2015 NOW THE POSSESSION OF THE PROPERTY IN AUGUST OR SEPTEMBER 2015. CAN I CLAIM DEDUCTION U/S 80C OF IT TOWARDS THE STAMP DUTY AND REGISTRATION CHARGES PAID IN A.Y. 2015-2016

  11. M.A.MOBIN says:

    If the spouse is a Government servant and also comes under the purview of Income Tax. The savings made against spouse name is eligible for 80 C deduction

  12. mukesh paliwal says:

    I purchased a house from yeida on installment. Will i get any rebate in income tax on the interest paid or principal paid to development authotity

  13. vishwas malik says:

    Is there any provisions for deduction of interest paid on construction linked installment provided by bank as housing loan to the company on behalf of member/assessee before possession of the hosing unit/flat ?

  14. satish lad says:

    investment in fix deposit is better for medium class person he could not invest every time in house also mediam class persons cash flow should consider

  15. Dr. Arun Draviam says:

    How come the author is silent about interest paid along with capital repayment in instalments? He is not talking about the 30% standard deduction allowed on the House Property. And further if the income thus computed is a negative figure, the same is allowed to be set off against the salary income. This is how we motivate the younger generation to do tax planning and add to the common stock of residential houses in the country.

  16. Ashwani says:

    PPF is one of the best and safe way of investment for the purpose of deduction under 80C because no information is given by the ppf deott. to the income tax authorities. Please correct if required.

  17. Rahim mardhani says:

    It was waste of time, as this is copy-cut-paste of the bare act. what is the sense in pasting what is written in the act, instead it should have concentrated on explaining which are the items that can be claimed in 80 C (a) & what is covered under the other expenses in relation to word ‘Transfer’. can Service Tax & VAT paid to builder be claimed in other expenses? . . .

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