Lakesh Kumar

Lakesh KumarIncome Tax Benefit on Home Loan Interest under Section 80EE Of Income Tax Act. For the A.Y. 2017-18 and Subsequent Assessment Years

Introduction- Finance Minister inserted a new section 80EE relating to the additional deduction in respect of interest on loan taken for residential house property. Assessee can avail the benefits of this section in two A.Y. 2014-15 & 2015-16. Purpose of this section is to promote house ownership & give a fillip to a number of industries like steel, cement, brick, wood etc. besides jobs to thousands of construction workers. However as per new 80EE section, the deduction is available for A.Y 2017-18 and in subsequent years until the loan is repaid.

Applicability- Benefit of this section 80EE can be availed by Individual assessee. Deduction under this section is not available for any other assessee (like HUF, firm etc.). Individual can claim benefit under this section only when all the following conditions are satisfied, these are-

  • He has taken loan for acquisition of of Residential House Propety.Purchaser should be first time buyer. i.e. he has never purchased any house and now he is going to purchase a house.
  • Value of the residential house property should not more than 50 lakh.
  • Loan taken by Individual for the residential house property should not be more than 35 lakh.
  • On the date of sanction of loan individual does own any residential house property.
  • Loan for this purpose taken by individual should be from the Bank or Housing Finance Company.
  • For this purpose, loan should be sanctioned between 01.04.16 to 31.03.17.

U/s 80EE (4) – Provides that where a 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.

Quantum of Deduction- 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.

Example- Assessee has taken a loan for the purpose of residential house property & interest payable on loan Rs. 90000/- for the A.Y.2017-18. In this case assessee can claim deduction 50000/- in A.Y.2017-18 and in the subsequent years till the loan is repaid

Clarification of Section 24 and Section 80EE-

Where the property has been acquired, constructed, repaired, renewed or reconstruction with borrowed capital, the amount of any interest payable on such capital is deductible under section 24(b), subject to the prescribed conditions.

As per Sub Section 4 section 80EE, assessee can avail deduction in respect of interest payable on loan only when assessee does not claim any deduction in respect of such interest in any other provisions of the Act.

[Deduction in respect of interest on loan taken for residential house property.

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.]

Key Notes

1) Deduction available to individual only not to other persons.

2) Deemed owner concept does not apply in respect of such deduction.

3) Spouse would not disqualify for relief Under Section 80EE in case of residential house purchased in joint names.

4) Assessee can purchase house for both purpose .i.e. it can be for self occupied or can be Non self occupied.

5) Interest includes “any service fee or other charges in respect of money borrowed or processing fees”.

6) Date of make application to loan irrelevant but date of sanction of loan is relevant.

Section 80EE : Deduction for interest on loan for residential house property

( Author is a CA Student and can be reached at E-Mail-: lakeshkr@gmail.com)

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(Article was First Published on 02.07.2018)

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243 responses to “Section 80EE Income Tax Benefit on Home Loan Interest”

  1. sathish karanth says:

    Interest on housing loan – Loan taken on both self occupied and let out.
    Interest eligibility – 2 lakhs + 2 lakhs or both put together 2 lakhs

    please confirm

  2. pavani says:

    my query is related to section 80EE.

    assume a property is purchased by two individuals. property value >50 lakhs and loan amount >35 lakhs.

    in this situation, is there any scope for claiming 80 EE benefit?
    By sharing the property value and loan amount between two individuals (e.g. Property value 36 lakh and 15 lakh and loan amount 28 lakh and 12 lakh for individual A and B respectively).

  3. V.srinivasulu says:

    I received 5000 rupees as tuition fee reimbursement for 2 children from my employer and one lakh medical reimbursement whether it comes in taxable income or not

  4. B G GARG says:

    Subject: I-tax benefits u/s 80C & 80EE+ 50,000/- and I-tax benefits expenses on medical treatment
    Sir,
    1. I am working in central govt services (CWC) at New Delhi. I had purchased a 5 year old ready to move house ( 08/2016 and taken key ) at Haldwani (Nanittal) registry made in favor of my wife (House wife & fully depend on me) amounting to Rs. 36 Lakh + registry expenditure Rs. 1.64 Lakh + loan expenditure 0.26 Lakh Total amount Rs. 37.90 Lakh. I had taken advance from my GPF for above house Rs. 7.90 Lakh as margin money. Loan taken from LIC–Home loan Rs. 30 Lakh at EMI Rs. 27950/- per month for 20 year. Due to length of my service (below 3 year) LIC-HL sanction loan Rs. 30 Lakh in favor of My wife (Applicant), Myself and My son (Co-applicant) working in private org at Gurgaon & his services balance about 28 years). Can I take I-tax exemptions u/s 80cc & U/S 24 along with additional special rebate Rs.50,000/- Or my son can be take up the same. Now I want your help about Income-tax rebate as per current directions of CBDT.

    2. Today I am facing / suffering critical disease after providing of STUNT at MAX-Saket on 25/26- 06-2016 till date and due to wrong treatment / Reaction of medicine, I was facing failure of Multy -organs as Kidney, Liver, lungs & Skin (DRESS SYNDROM) etc. during the period till date, I was admitted 02 times at MAX-Saket-Delhi, 01 times at Mool Chand hospital-Delhi and 02 Times at AIIMS-Delhi
    A. I had taken all bills as per rate of CGHS but my department not reimbursement in full bill amount so that can I take Income tax benefits at balance amount of bill because it is my income loss.
    Now I want your help about Income-tax rebate as per current directions of CBDT
    Thanking yours.

    B G Garg
    Pan: ACWPG5799E
    Ph. 9891941499, e-mail bggarg123@gmail.com

    • ramakrishna says:

      i am central govt employee, i have taken housing loan of 20 lakhs, my parents staying in that home and i am staying rent house. can i get hra exemcption and interest loan exemcption and first time i was taken loan can i eligible 50000 rupees excemption ( 80EE).
      please clarify

  5. Brij Gopal Garg says:

    I am working in CWC at New Delhi and purchased house on 08/16 at Haldwani (Nanittal) in the ownership of my wife (House wife ) Rs. 37.90 Lakh (cost of registry & loan) for this I had taken advance from GPF as 20% margin money. LIC–Home Loan Sanction amount Rs. 30 Lakh @ Rs.27950/- P/m. for 20 year in favor of My wife (Applicant), Myself and My son (Co-applicant working at Gurgaon) my question is Who can claim I-tax benefits u/s 80C & 80EE+ 50,000/- as myself or my son.

  6. PRASANNA KUMAR BK says:

    Hello,

    I bought a flat on my wife’s name and taken a loan on both of ours name. EMI is deducting from my account.

    In this situation, who (me or my wife) will be eligible for taking tax benefit on housing loan interest part?

  7. jp says:

    interest component is to be filled under sec 80 EE . But the same is not being reflected in itr form, please provide solution.

  8. Mayur says:

    I have not got the possesion of the house can I claim this benefit if I satisfy all other conditions

  9. U.K.SINHA says:

    I purchased a residential flat worth Rs 30 lakhs in November 2015 by taking loan of Rs 21 lakhs from SBI in the month of July 2014 for a term of 12 years and accordingly I am paying the EMI.Now i want to liquidate this entire loan amount(Principal+Interest) by selling my another residential flat possessed by me in May 2015 which was constructed by builder on my own inherited land.Now my question is whether the amount gained arising out from sale of my previous flat and used for liquidating loan amount used for purchasing 2nd flat comes under Tax liability or exemption from Tax?

  10. Siddharth Singh says:

    I TOOK A HOME LOAN OF 35 LACS FOR THE PROPERTY WORTH 45 LACS FOR 30 YEARS IN AUGUST 2015…LOAN IS A JOINT LOAN…PROPERTY IS GOING TO BE HANDOVER IN 2017 END…IS THERE ANY PROVISION TO CLAIM ANY TAX BENEFIT IN THIS FINANCIAL YEAR 15-16…LOAN FROM sbi

  11. shiva says:

    i made home loan repayment of 5 lakhs rupees, but from this 5 lakh i can claim only 1.5 lakhs. can i claim rest of 3.5 lakh in next financial year 2016-17.

  12. shiva says:

    I home loan sanctioned on 26/03/2012. and i took possession on 06/12/2013. the interest which accrued in that period is about 125000/- which i dint claim till now.
    i just want to know that can i divide 125000 in five equal parts and claim that in this financial year and coming financial years

  13. ADITYA GARG . says:

    Hello,

    I bought a flat on my wife’s name and taken a loan on both of ours name. EMI is deducting from my account.

    In this situation, who (me or my wife) will be eligible for taking tax benefit on housing loan interest part?

  14. Ashok Kumar Rout says:

    Sir,
    I have taken loan of 25 lacs in 2011. I did not get any tax exemption since it was possession was not obtained. Now I got possession in Nov 2015. I am claiming interest exemption on 2015-16. My question is

    1. How can i get the interest deduction 2012-13, 2013-2014 and 2014-2015.

    2.Am I eligible for first home buyer benefit of 1 lacs under 80EE

  15. Ashok Kumar Rout says:

    Sir,
    I have taken loan of 25 lacs in 2011. I did not get any tax exemption since it was possession was not obtained. Now I got possession in Nov 2015. I am claiming intrest exemption on 2015-16. My quesstion is:-

    1. How can i get the interest deduction 2012-13, 2013-2014 and 2014-2015.

    2.Am I eligible for first home buyer benefit of 1 lacs under 80EE

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