Deduction in respect of interest on loan taken for residential house property(Section 80EE):

Vide Finance Act 2013, an individual is allowed a deduction upto a limit of Rs 1,00,000 being paid as interest on a loan taken from a Financial Institution, sanctioned during the period 01-04-2013 to 31-03-2014 (loan not to exceed Rs 25 lakhs) for acquisition of a residential house whose value does not exceed Rs 40 lakhs. However the deduction is available if the assessee does not own any residential house property on the date of sanction of the loan.

However this section has been amended by Finance Act, 2016, now the  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, subject to certain conditions mentioned below:

i. He has taken loan for acquisition of of Residential House Propety.

ii. Purchaser should be first time buyer. i.e. he has never purchased any house and now he is going to purchase a house.

iii. Value of the residential house property should not more than 50 lakh.

iv. Loan taken by Individual for the residential house property should not be more than 35 lakh.

v. On the date of sanction of loan individual does not own any residential house property.

vi. Loan for this purpose taken by individual should be from the Bank or Housing Finance Company.

vii. For this purpose, loan should be sanctioned between 01.04.16 to 31.03.17.

Please Note :-

1. The Assessee can claim deduction under section 80EE on  interest payable on home loan. The amount deduction shall be the interest payable or Rs 50,000,whichever is less.The deduction is available for A.Y 2017-18 and subsequent assessment years till the loan is repaid..

2. Deduction under this section is allowed for any interest payable on loan only when deduction shall not be allowed in respect of such interest under any other provisions of the Act for the same or any other assessment year.

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Extract of Section 80EE as per finance Act, 2016 :-

80EE. (1) In computing the total income of an assessee, being an individual, there shall be 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 (10 of 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.]

Also Read :

Analysis on cross connection between Sec. 80EE and Sec. 24(b)

Tax Benefit on Home Loan

Income Tax Benefits from House Property and Loan

(Republished With Amendments)

More Under Income Tax

Posted Under

Category : Income Tax (27873)
Type : Articles (17582)

33 responses to “Section 80EE : Deduction for interest on loan for residential house property”

  1. Kharat Bharat says:

    I have been sanctioned housing loan Rs.2300000/- by government, being a government employee in October, 2015. The property is a residential property and my first property. I have availed deduction u/s 24 (b) in the F.Y.2015-16. In the current F,Y. year interest paid is 2.44 lac. My taxable amount is very low i.e. Rs.45000/- Can take benefit of section 80EE in current financial year ?

  2. Ram says:

    I had availed home loan of Rs.34 lakhs in July 2015. Value of property is less than Rs.40 lakhs. Pls tell me if section 80EE is applicable for me? If yes then how much?

  3. Dipshikha says:

    If a person lives in government quarter can he claims deduction of interest on home loan of his flat.

  4. Ramarao says:

    Hello
    “loan sanctioned during the period 01-04-2013 to 31-03-2014 (<25 lakhs amount )are the eligible for 80EE" is it correct ? or later than 31-03-2014 also are eligible to claim 100000 under 80ee.

  5. Amol says:

    Sir,

    I have purchased homein Sept 2011 which is in under construction till date. Have taken 20L loan from LICHFL. Paying EMI’s from Mar 2012 to till date. As i have not got property pessession i have not claimed anything under income tax. Most probably i will possession in Jun 2016.

    My questions are:
    1. What would be the steps i need to do to claim 2013-14, 2014/15 and 2015-16?
    2. Is this is right that you can’t claim unless you won’t get possession?

    Thanks,
    Amol

  6. ARUN KUMAR SAJJA says:

    sir,
    good morning.
    I have taken housing loan amounting to Rs. 20, 00, 000/- last year.
    i paid principal amount of Rs. 90570/- and interest amount of 1,48,381/-.
    i also have savings on LIC. Rs. 52,000/-
    ICICI,Rs. 20,000/-
    GPF Rs. 96,000/-
    TDS paid Rs. 82542.
    i would like to request you to inform about the refund of amount, i can get.

  7. Pratik says:

    Please suggest me for following query for filing income Tex.return.

    I need to claim housing loan repayment (80C) as well housing loan interest under 24 U/S. which is not considered in foam 16 for assessment year 2014-15.
    • for housing loan repayment will add principal component in 80C while filling return…….OK ?
    • however please suggest me how to claim interest component in under 24U/S while filing return.

    • KAILASH TALESARA says:

      Dear Sir,
      While filing ITR you can show minus income (-) under the head Income from House Property by the amount of interest paid by you.

  8. B K TIWARI says:

    i purchased a independent floor on 25 lakh in month of jan 2015 i took loan of 22 lakh my prepament of loan details for FY 2015-16 is principal 41000 & interest 2,23,000 .Can i get the benifit of 80EE

    • KAILASH TALESARA says:

      No. Your loan must be sanctioned between from 1/04/13 to 31/03/14 to avail the benefit of Section 80EE along with other conditions

  9. Subash Sahoo says:

    Hi Team,

    I have purchase a flat under construction which is satisfy all condition for 80EE.My question is am I able to claim the interest amount which I paid for this financial year.
    I have tried on online form but could not entry. Please guide me

  10. Dinesh says:

    Sir,

    I had booked a flat in the year 2011 & paid the amount demanded by the builder by raising a loan in January, 2012 under subvention scheme. I was not required to pay either interest or EMI for the initial two years i.e. upto January, 2014 & my first EMI became due & paid in the month of February, 2014. The completion of the construction is expected during the year 2016.

    Please inform me as to whether the period of completion of construction of the house would be reckoned from January, 2012 (the month of availing home loan) or from the month of February, 2014 (the month of payment of first EMI & arising of my interest liability because till his month the interest was being paid by the builder) & whether I would be able to claim the deduction on account of interest on house loan upto 2.00 lac in the FY 2016-17.

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