prpri Section 80EE – Analysis of The Forgotten One Section 80EE – Analysis of The Forgotten One

The boon for the first time home buyers, the section 80EE has been reintroduced from FY 2016-17. According to which, the interest paid on loan for buying house property shall be allowed upto Rs. 50,000/-. The said deduction can be claimed over and above Rs. 2,00,000/- under section 24 and Rs. 1,50,000/- under section 80C. Section 80EE was first introduced in F.Y. 2013-14 for assesses being Individuals, with maximum allowable deduction of Rs. 1,00,000/-. The same section had been revived for F.Y. 2016-17 with change in maximum allowable deduction upto Rs. 50,000/-.

Terms to be compiled for claiming deduction under section 80EE

a. The loan taken for the purpose of acquiring residential property shall have been sanctioned only between 01-04-2016 and 31-03-2017.

b. The amount of loan sanctioned shall not exceed Rs. 35 lacs.

c. Value of the residential property which is subject to loan shall not exceed Rs. 50 Lacs.

d. The individual must not be owning another residential property as on the date of sanction of loan.

e. The loan has to be sanctioned by Housing Finance Corporation or Financial Institutions.

Eligibility criteria for claiming deduction under section 80EE

  1. Assessees who are Individuals can only claim this deduction
  2. Subject to the above conditions, the benefit of this section is available to all the individuals who have purchased the residential property in joint ownership.
  3. Unlike section 24, there are no conditions under this section for “Self-occupied”, hence the benefit of this section shall also be allowed where individual is not residing in the property which is subject to deduction u/s 80EE.

How to claim deduction under section 80EE

One may claim deduction u/s 80EE in following manner:

a. Ascertain the total interest payment portion towards the repayment of loan of residential property for the whole financial year.

b. Claim deduction upto Rs. 2,00,000/- under section 24 (subject to conditions of the said section)

c. The balance amount to be claimed as deduction upto Rs. 50,000/- u/s 80EE subject to above mentioned conditions.

Do not forget to take benefit of this section in filing your return and while submitting the details to your employer for the purpose of deduction of tax at source (TDS).

-Dharit Mehta, FCA – (E)

Author Bio

Qualification: CA in Practice
Company: S. D. Mehta & Co.
Location: Ahmedabad, Gujarat, IN
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July 2021