Lakesh Kumar
Income 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 not 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)
I have borrowed home loan in fy 2013-14 for under construction property. Since construction is not complete and it satisfies the conditions(loan for First home, 10 lakh loan and 21 lakh property cost, santion in Sept 2013) may I take benefit of section 80 EE only? (section 24 cannot be used since it under construction property). I have doubt because it says that ‘additional deduction’.
Thanks
Hello Lakesh…
I am staying in bangalore in a rented house for 10.000/- .
Recently I have bought a house in my home town(AP) for my parents.
This is my first housing loan and the property cost is 31 lakhs, the home loan was sanctioned in January 2014 for an amount of 22 Lakhs.
1. Am I eligible for tax deductions under both 24(b) and 80EE sections (2,50,000)?
2. Can i claim HRA(1,20,000) from my employer at the same time (Since, my parents are staying in new house and it is not let out property)?
Jailash Sir, You are eligible to get interest deduction, maximum Rs.1 Lac U/s 80EE only for the A.Y 15-16, not beyond this.
hi sir
i purchased home for 35 lakhs.
loan of 24 lakhs got and approve in march 20 2014.
emi will start from april 2014.
interest for next financial year is 2lakhs.
also this is my first home so iam eligible for 80EE.
Can you tell me wat are the tax benefits i get. I can use the tax benefit for next year only right 2014-2015.?
regards
Jailash
hi sir
i purchased home for 35 lakhs.
loan of 24 lakhs got and approve in march 20 2014.
emi will start from april 2014.
interest for next financial year is 2lakhs.
also this is my first home so iam eligible for 80EE.
Can you tell me wat are the tax benefits i get. I can use the tax benefit for next year only right 2014-2015?
regards
Jailash
Tapan Sir, if you complied with all the conditions to get deduction, then you can claim deduction of interest payable as on March,2014.
Hi, My loan sanctioned in feb2014 and first disposal is going to happen in 1st week of April. My property value is 258000 and loan amount is 180000. Kindly let me know whether I can avail the tax benefits under section 80EE as my loan sanctioned in 2013-2014 financial year ?
TANAY SAHA Sir, I think you can not get deduction of Rs.11,000/- u/s 24(b) because this section allow deduction only for interest payable for the year. But definitely you can get deduction of aforesaid amount u/s 80EE.
Prashant Sir, I am considering this question separate because i dont know how many properties you have. As per my knowledge there is no such provisions relating to interest deduction as your account depatt. said. According to me, you can get interest deduction . If your Acct. Deptt. said then please ask him which section contains such provisions.
Prashant Sir, AS per my opinion you can consider surat flat as self occupied (but no other benefits derived from surat flat) & for this you can avail Max. interest deduction of Rs. 1.5 Lacs.
Sir,
I have purchased a residential property in pen which is 30 KMS away from my company township where i stay in company’s family accomodation and company has included my accomadation value in my gross salary and they are not considering my Home loan interest paid for deduction under section 24. My accounts dept is saying that as you stay in company accomadation and the property is less than 500 KM away from the company township, you can not avail the benefit of section 24 and other thing till date i ahve not given the property on rent. Is it so?
TANAY SAHA Sir, 1). yes you can claim interest deduction of Rs. 50940 u/s 80EE in A.Y 2015-16.
2.) You should claim Rs.11000/- deduction in A.Y.14-15 u/s 80EE even employer din’t show in form 16.If you get deduction of Rs.11000/-in A.Y.14-15 then also in A.Y.15-16 You are able to claim interest deduction u/s 80EE of Rs.50940/-
Prashant Sir, As per my opinion you should consider flat(surat) as self occupied (but no other benefits derived from surat property) & afterword you can claim deduction of interest max. 1.5 lacs.
Sir i have taken Rs 1980000/-( Nineteen lack eighty thousand only) house building loan from HDFC for purchasing of resale flat at Howrah .
My Loan got sanctioned on 2nd June 2013.
The value of the property is Rs 2200000/-( Twenty two lakhs) .
Disbursement of the loan ( full amount ) is on 31.01.2014 and acquisition date is on the same date .
My interest component of EMI for the Fy year 13-14 ( Assessment year 14-15) is Rs 34000/- ( which i am calming deduction under section 24 b) and principal is Rs5000/- ( claim deduction under Section 80c) in this financial year i am not utilizing the benefit of rs 100000/- deduction under section 80EE.
Next financial year FY 14-15( AY 15-16) my interest is Rs 200940/- Principal is Rs 32297/-
Now my question is
1) As i have not utilized the 1 lakh extra deduction limit under 80EE in last financial year so can i avail Rs 50940 deduction ( 200940-150000)under section 80EE in the FY 14-15( AY 15-16) after availing the 150000 under section 24 b and Rs 32297 under section 80c
2) i have paid Rs 11000/- as a processing fees for my loan sanction to the bank on 2.06.2013. the same amount can i claim for tax deduction under 24b in the current financial year 13-14. Actually the amount is not included for TDS calculation in my office . so after issuing the form 16 from my employer ( where this 11000/- is not shown) can i claim while filing the income tax return for the AY 14-15
Prashant Sir, Yes you can consider the flat(surat) non self occupied ,if you have another house property in that place where you are working.If you consider the flat (surat) as non self occupied then you can claim deduction of interest Rs.1,90,000/-.
Sir,
I have a query regarding Home loan interest deduction.
I purchased a flat in surat, but I dont live in surat. I pay Rs 1,90,000.00 as Interest yearly and Rs. 29,000 as principal yearly.
My question is whether I can be considered Non self occupied. and to what limit i will be allowed to deduct home loan interest be it 1,50,000 or 1,90,000.
thank you in advance.
Pradeep Sir, you are not able to get deduction because value of house is greater than 40 lacs(Co-ownership doesn’t matter).
Dear Lakesh Sir, thanks a lot for information on Sec 80EE.
I along with my brother have purchased a house property worth 51 Lacs.
Loan Amount is 40 Lacs which is sanctioned during FY 2013-14. As Home loan Interest deduction is per person and not per property, can we claim deduction under Section 80EE, treating the property half owned by each of us, i.e. 50% of House Property amoount is 25.5 Lacs and loan amount will also be 20Lacs.
Please guide.
Mr.Nitin , In response of your query you are able to get benefits of HRA & Interest payable on loan. Maximum limit of interest deduction for self occupied is 1.5 lacs.
Hi !
I am residing at Delhi. I am paying rent of Rs 20,000 per month. I am about to buy a flat at Ghaziabad(U.P.) for my parents. I will take a home loan of Rs 25 Lac for this flat.
Kindly let me know if I can avail tax benefits for HRA as well as on interest paid to Bank. I will continue living at my Delhi property while the one at Ghaziabad will be used by my parents. Value of flat at Ghaziabad will be approx 50 Lacs.
In case. I get benefits of interest payable on Home loans, Is there any limit to the same?
Mr.Vishal,According to me “you and yours wife are not able to take benefit of Section 80EE because Loan sanctioned by finance comp.to purchase a house is more than limit 25 lacs(whether yours wife first buyer)”.
Mr.Kumar, Sir, you are not eligible to take benefit of Section 80EE , because the value of the house & limit of loan sanctioned is beyond the conditions.
Mr.SIVAKUMAR.M.R. Its depend upon the ownership of the house property. According to me u/s 22 of Income Tax Act.owner of the property can claim deductions.
Mr.Balram Sharma, I am assuming that you have read all the conditions of this section. If you purchased a under construction house then you are not able to avail the deduction u/s 80EE
Hi,
I am first-time Home buyer (I’m the only earner in y house)
My house property Value = 60L & i have got LIC housing Loan Sanctioned for 40L (with 10year Tenure) for which already a part of amount started in 2013 Oct onwards, Possession will be in 2015
Can you please suggest how to I avail Tax benefit ?
What kind of documents/proof should i submit for availing Tax benefit ?
Am I eligible for 80EE?
Regards
Kumar
I have a query regarding Sec 80EE
Me and my wife have a joint ownership of the property of less than 40 lakhs bought in 2013
1) I have sanctioned the loan of 29 lakhs although I have only going to leverage 25 lakh. Is it still imp to have the loan sanction 25 Lakhs itself or the scenario I mentioned will work where the sanctioned amount is more than actual leveraged?
2) This is my second property(no loan taken on the first property), however this is my wife’s first property can my wife avail the additional 1L benefit under sec 80EE if not me ? Also my wife is the first applicant of the Home loan but I am primary owner the property
Regards
Vishal
Myself and my wife have jointly taken housing Loan . Repayment including interest is paid by me only. My Employed wife is not availing any income tax deduction towards Principal and Interest.Only i am claiming income tax benefits.
TO whom Declaration for non claiming to be obtained ? from my wife ? Or from her employer ? What are the relevant sections .
Pls clarify
Hi There,
Pleases help me to understand this as, I purchased under construction house and got Loan sanction amount is 18 Lac. I have submitted interest certificate to my company under 24 section but my company is asking for possession letter from the builder. As per the builder I will get possession offer letter on 2016 only.
So can I avail this under 80EE Section? Please suggest.
Thanks,
Balram
Hello Mr.Tapan , In response of your query you are able to get deduction u/s 80EE because Interest claim on payable basis but deduction on 80C based on paid basis. However total value of house must not be more than 40Lacs.
Hi, I am a first time home buyer and booked a flat on 15th Jan 2014 and applied for Home loan for 18 lakhs with IDBI bank. My loan got sanctioned on 12th Feb 2014. the first disposal amount is going to be 15 lakhs on 2nd week of March 2014, so the first pre EMI deduction from my account will happen from April 2014 through ECS. My query is whether I am entitled to get benefit under 80EE as my loan got sanctioned in Feb 2014 though my first payment is in Apr 2014 ?
Thanks a ton Lokesh for your valuable suggestion. I will check at my end what best I can extract.
Regards,
Mrityunjay
Mr.Ashish ji, you are not able to get deduction because loan should be sanctioned between 01/04/13 to 31.03.14. & Date of possession not relevant.
Mr.Amiya Mandal ji, I think you wrote wrong date 10/02/13 (10/02/14) & also you not specify whether loan has taken for acquisition 0r construction. So I am considered as below-
U/s 80EE- If you have taken loan for construction then you can not take deduction under this section or if you have taken loan for acquisition then you can claim deduction for interest payable subject to some conditions.(Max. Limit 1 lakh).
U/s 24(b)- if you took loan for construction then you can get deduction from the finance year in which construction will complete. Or loan taken for acquisition of self occupied property then you can avail deduction of interest payable in this F.Y.(Max.Limit 150000/-)
According to me IF you comply with conditions then you can get deduction U/s 80EE & 24(b). (Max limit 2.5 lacs)
Mr.Mrityunjay Chauhan ji, Its my pleasure to give response all queries.
1&2).You have purchased a PLOT for house construction, so according to me you are not eligible to claim deduction because we can take deduction in respect of purchase/construction of residential house property but you purchase a land.
I want to give advice, I think it may be batter, you can get deduction for whole loan U/s80C or 24(b)(loan applied for purchase of land + for construction ) when construction will complete.
3).If your house not constructed within 3 years then Maximum interest limit (1.5 lacs) for self occupied property will be reduce to 30000/-.
4).194-IA states that buyer will have to deducted 1% TDS on Immovable property subject to some conditions.
Mr.Amiya Mandal, I think you wrote wrong date 10/02/13, it may be 10/02/2014. So I am considered the date 10/02/14 and also in your query not specify that you have taken loan for construction or Acquisition. So as per my view-
U/s 80EE- if you took loan for construction than you are not eligible to claim this deduction, or if you took loan for acquisition than you can claim subject to some conditions. (Max.limit 1 lakh)
U/s 24(b)- you can claim deduction of interest upto maximum limit 150000/-.(for self occupied), however if your property under construction than it can claim in that F.Y.,in which construction will complete.
If you have taken loan for acquisition & you comply with all conditions of Sec-80EE ,As per my view you can claim both deductions for interest payable.
I am the first time home loan taker, i got the possession of the flat in F.y. 2013-2014 but my loan was sanctioned in year 2011-12. Can i get the tax benfit under Section 80EE Of Income Tax Act .
Hello,
First of all I would like to say thanks for such a informative portal. Coming to my query.
I have purchased a PLOT for which I took a loan of approx 9 Lakh from LIC. The EMI is almost 12,000. As soon as I get possession, will start my construction.
The loan terms says it is Housing loan and also mention one Section 194-1A of Income tax act.
I need your assistance for following points.
1. Can I avail tax redemption for my present loan? as this is housing loan.
2. If not than will I get tax benefits for all my EMI paying once I construct a house?
3. What if the builder does not give me possession in time and due to which construction get delays beyond three years?
4. is there any benefit which i can take under section 194-1A
It will be very helpful if you can take out some time to reply my queries.
Thanks in advance.
Mritynjay
I have taken house building loan from State Bank of India on 12/11/2013 for the first time of Rs. 1500000/-. I have re-payed Rs. 13000/- only as interest till the date (10/02/2013). I think I will re pay around Rs. 200000/- as hbl interest in the next financial year. So my Question is whether I will get tax deduction of Rs. 150000 only or of Rs. 200000 as the hbl interest for the next financial year. Plz. reply..
Sir, as I said below this section not clearly says that we can claim additional deduction for interest but as per my view we should claim both deduction U/s 80EE subject to some conditions and U/s 24(b). (Total Deduction 2.5 Lacs)
if i purchased new house on 1.6.2013 with help of bank loan..can i claim housing loan interest on both u/s 24 (b)(one lakhs) and 80EE (one lakhs).. so totally i claim two lakhs ..is it possible sir..plz explain clearly
Sir, This section not clearly says that we can claim additional deduction for interest but according to me we should claim both deduction U/s 80EE subject to some conditions and U/s 24(b).
Is it possible to claim Home Loan interest under both Section 24 b and 80 EE.
Like in my case, I pay a total interest of 2,40,000. Out of which I am planning to claim 1,50,000 under sction 24 B and another 90,000 under section 80 EE.
is this possible ??
Assessee can purchase any residential property. i.e. it may be non self occupied property & can claim only when, assessee not owner of the property on the date of sanction of loan. It is required that loan should be taken between 01.04.13-31.03.14.If you have taken loan before 01.04.13. than you are not able to claim deduction u/s 80EE but you can claim deduction u/s 24(b).
Finance Bill , 2013 contain an announcement of additional deduction of interest (up to Rs.100000 )on housing loan for first time buyer [i.e. (i) He has never purchased any house and now he is going to purchase a house. (ii) On the date of sanction of loan, the individual does not have any own residential house property.] state that-
This deduction will be over and above the deduction of Rs.150000/-allowed for self occupied properties under section 24 of the income tax Act.
****
It seems there is a contradiction in the above announcement by the Finance Minister that deduction u/s 80EE will be available only when the assessee does not own any other house property on the date of sanction of the new loan.Under this condition , how is it possible for the assessee to have borrowed a housing loan already ( i.e.with out owning a house under self occupation )and claiming a deduction u/s 24 of the Act.
This may kindly be clarified.
Sir, Tax deduction for the payment of interest shall not be allowed before the construction is complete. However pre-construction interest can be claim in five equal installment from the year in which construction is complete u/s 24(b).Sec. 80EE is silent about the under construction property provisions but according to me we can not claim deduction for under construction property. Because word given in section 80EE is Acquisition.
If a person has taken home loan and he is paying EMI of under construction home, can he able to get the benefit of 80EE and 24b?
yes, We can claim deduction U/s 80C
shall we consider the stamp duty and registration charges for income tax exemption
Yes Sir, this section beneficial to persons whose budget & value of the house less than 40L.
The section aims to promote buyers to purchase house properties. This section is more relevant for small towns where a property can be purchased with a budget of INR 40L.