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)
Author Bio
Mani Sir, You can get whole amount deduction for Interest u/s 24b and for principal amount U/s 80C.
Sir,
I had purchased a flat from resell in this financial year 2014-15 and doing home loan for that… This flat is in city where I doing job.. I got my HRA from my company as part of my CTC.. My dependent parent and wife leave in city 150 km away from my job place due to medical treatment and medical assistant.. And I pay 11000/=Rs rent for that.. Can I take advantage of both home loan and HRA? I have the land loard pan card and rent pay slip.
Please reply…
Gaurav
09979845981
Hi,
i need to know how much tax benefit will i get for my home loan.
Please find details
Property value: 46 lakhs
Loan amount: 30 lakhs
loan sanctioned date: july 2013
principle component : 39000
interest component : 145000
will tax exemption will applicable to me?
I have loan sanctioned in feb 2014.
i) property value < 40 lakhs
ii) Loan value less than 25 lakhs
iii) first home.
Now as per disbursment of loan I just had 5 k interest in Feb 2014 and March 2014 which I claimed in IT return of 2014 under 80EE.
Now upto March 2015 I will be charged additional interest of 105K till March 2015.
As still there is no possession of property and completion of property.
Can I claim the interest of 95K under 80EE this year. and remaining of (105-95) 10k over next 5 year under 24(b).
I am a banker and has availed staff housing loan of Rs 20 lacs in 2011. I will possession in Feb 2015. In staff housing loan we first pay principle portion in first 15 years and interest debited at simple interest in next 5 years. Now, interest is debited every months but not repaid. Only principle amount is being paid. Whether I will be able to claim benefits of interest debited but not paid in my income tax return?
What if the possession is after 3 years ?
consider,
the flat booked in Dec 11. House loan sanctioned in June 12 while possession obtained in March 14. Is the 3 year timeline start from date of booking or actual home loan sanction or first disbursement ??
What would be effect on tax benefit ?
Zuber Sir, you can get HRA deduction however interest deduction can be claimed only when the construction will complete.you are not eligible to get deduction u/s 80EE.
Sir,
I have registered a property in Aug 2014 and I am paying an Emi of Rs. 31400 (Prin+int) for a loan of Rs. 32 lakhs.
The property is still under construction and I will be getting the possession in Jan 2015.
Now my Q. is how I can claim both HRA till Jan 2015 and repayment of interest component.
Thanks & Regards
Zuber
It is not clear if the benefit of 80EE for rebate in income tax on the interest paid on home loan is available for the property under construction or it is meant only for the properties for which construction is completed. Please clarify
I HAVE PAID MY HOUSING LOAN BEFORE THREE YEAR, IF I HAVE TAKEN HOUSING LOAN AGAIN ON THIS HOUSE, I AM ELIGIBLE FOR IT BENEFIT OR NOT. IF YES IN WHICH RULE
Hi,
As we know that the income tax rebate on Home Loan is possible only after the possession of the flat. After the registration what is the proof required to show that the home is possessed?
my wife is owner of property. home loan bank shows her as borrower not to me. i am co applicant as per bank. my wife is not working i am paying emi from my saving bank salary account.can i take tax benifit, my wife is a house wife
Hi,
I am eligible for a house loan of 25 lak and which is approved. now I wanted only 15 lakh loan amount and wanted to to cancel the remaining 10 lakh loan. I will give a written application to cancle the remaining 10 lakh loan so would i have to pay any kind of interest for the 10 lakh which has not been disbursed yet?
Hello,
I have taken a home loan.
It is sanction on dated 29 Jan 2013 and My EMI has been started from MAY 2014 and property is under-construction.
Am i eligible for section 80EE for Tax Benefits?
Please provide me reply.
Hello,
I have taken a home loan.
It is sanction on dated 29 Jan 2013 and My EMI has been started from MAY 2014 and property is under-construction.
Am i eligible for section 80EE for Tax Benefits?
Please provide me reply.
Respected Sir
Greetings
I had availed HBA loan from Canara Bank during 2004 and the interest on the loan amount is Rs. 75,000/=. Now I am planning to go for Home Improvement loan for Rs.7.5 Lakhs. with repayment period of 5 years. I would like to know whether Interest on Home Improvement is eligible to claim 100 % Income Tax exemption. Kindly clarify please.
Regards
R KUMAR
Please give advice:
Recently I have purchased a plot (not flat or house) by taking LIC housing finance
.
Can i get Section 80EE Income Tax Benefit on Home Loan Interest?
Thnaking you
Please give advice:
I purchased a flat taking home loan & getting income tax rebate facility (Flat & Home loan in my name).
Recently I have purchased a new one by taking joint home loan with my wife (Flat & Home loan in joint with my wife). .Wife is housewife & having no income.
All flats are in vacant condition (No rent).
Q1. Can i apply for income tax rebate against the 100% of principle & interest amount of joint home loan of 2nd property as wife has no income?
Q2.As there are no rent in both flats then have i to pay any income tax aginst these property?
Hi, My Concern is somewhat different. We have taken the property on my Mother’s name and she is home maker. My Father is retd. Army. I have taken the complete loan to construct the flat from LICHF. I am working for MNC in Bangalore. How can i avail the tax benefits..? Because my finance team wants that property and loan both should be on my name. Can i claim it by ITR..? That shouldn’t be the fraud with government. Please mail or comment me. Thanks.
Monu Kumar Choubey
I am PSU employee working SAIL
I am providing with Companies quarter.
Now, I have purchased the build up individual house for which I have taken home loan Rs.56.00 lakhs.
I have given this house for rented for Rs.8500/- per month.
my annual interest on home loan is around 4.5lakhs to 5.0 lakhs.
my annual income on this property is Rs.1.02 lakhs.
please suggest me
1) how much interest amount of Home loan is rebatable to my salary income.
2) if I show my house income also to my income. then how much interest amount of Home loan is rebatable to my salary income.
thankin you
I would like to know whether one cam claim deduction under section 80ee if one owned a residential flat on his name but sold it and purchased a new flat in year 2013-14
Is there any maximum cap on Housing loan or property value beyond which Housing loan tax benefits u/s 24 or u/s 80C cannot be availed?
I have loan sanction date of Sep 2009 for amount of Rs 15 lacs and pay EMI on that. The flat us not yet taken over. pls advise if i will get rebate in income tax
For claiming under section 80EE. I am fulfilling all the conditions except the house/flat has not been handed to me till date. I paid only pre-emi interest from Jan 14 to Mar 14 and not principal amount. Kindly clarify
In 2011,i have taken housing loan from LIC finance Rs 16,70,000 /- (4,700,00+12,00,000) and i am paying interest of Rs 1,85,000 annually,can i get benefit up to 2lack interest rebate ?? and if so under which section i can get benefit ?? please reply to this question ..
Sir,I have taken a house loan in the year 2008.and I am paying 51000 approx for the house loan interest amount.please clarify me if I am able to claim rebate under section 80EE
I took a loan of rs 20 lacs.and paid interest of rs 1lac 30 thousand in the financial year 2013-14.apart from act 24,how will i get the benefit of act 80ee
I have booked a flat in 2012 (pre-launch).
The handover is in March 2015
The project got all approvals in March 2013 and my home loan was sanctioned in April 27, 2013. After that bank started disbursing as per the demand from the builder. Till march 2013 the bank had disbursed 15 L to the builder. Since I was given exemption for 18 EMI’s my EMI will start from December 2014. But I had started paying interest to the bank since May 2013.
For FY 2013-14 I have paid 50k as interest. Can I claim it in 80EE.
Thanks
Gaurav
I have taken a home loan for a property under Government Housing Board. As on date the construction has yet not started, Whereas I am paying EMI’s worth 25 k from the past 13 months. Am i eligible for tax benefit. If not kindly explain will the EMI’s i am currently paying will go unaccounted for. Will these not be falling in any rebate
I took home loan from March 2014 and got possession by September 2014. Can i claim HRA from April 2014 to August 2014 and also claim the interest deduction of 2 Lakhs for the financial year 14-15?
Virender, Sir provisions of Sec-80EE not clearly specify but as per my view we should claim both deduction of interest payable u/s 24(b) and 80EE provided that we have complied with all conditions. We can claim HRA deduction whether we have own self residential house property or not, however property must not be in same city/place of your working place and you are paying house rent.
Iswar.Sir, You are not able to get deduction u/s 80EE because to get deduction we have to comply with all conditions specified in Sec-80EE. However you can claim U/s 24(b). on payable basis.(Maximum limit to take loan is 25 Lacs)
Hello;
If the house is jointly owned; e.g. husband and wife, then
A) Can they each claim 1 lakh benefit ( only if house value less than 40 Lacks)
OR
b) Can they claim 50 thousand each as benefit and the house value could be 80 lakhs ?
Loan amount 25 Lakhs
Dhananjay,Sir Deduction claimed u/s 24(b) or 80EE on payable basis. as you said you complied with all conditions of 80EE then you can claim interest paid/payable upto 31.03.14.
amar ante, No Sir.
Is section 80ee applicable for under-construction properties?
swapneel, Sir as per provisions if you working in same city in which you have house property,then you are not able to get HRA. If your working place is so far from your residence & commissioner allow then you may get.In given case, as per me you can get hra benefit & pay tax on rent received from ahmadnagar. And you can claim interest payable (Without Limit).
Sir, One of my client is in service and claiming HRA exemption. He booked a flat after took Home Loan. Can he claim Exemption u/s 24 and if yes,then what would i select self-occupied/let out in ITR Form because he is also claiming H.R.A. Exemption in his Form 16 . If not, Can he take benefit of sec. 80EE instead of sec. 24?
sir, this is a doubt regarding section 80(EE)
i have booked a flat whose cost at the time of booking is around 34 lakhs
i did the booking in feb 2014
by taking a loan of rs. 267500
i am fulfilling most of the condition except the 25 lakh loan cap
is there any way so as to avail this benefit a kind of tax planning so that i can get the exemption of 1 lakh this fin year (ay 2015-16). the flat is in the construction stage
i expect your reply
thanks
I was sanctioned home loan in FY 2013-14 and fulfill all the criteria for claiming deduction under section 80 EE.
I have paid pre emi of Rs. 75000 in FY 2013-14 and i got the possession on March 30 2014.
How can I claim pre emi for AY 2014-15
Since my EMI starts in FY 2014-15, can i claim interest deduction under section 24b as well as 80EE in AY 2015-16
Dear Sir,
I am a salaried person and get the HRA. I have bought a house in pune in 2012 with borrowed capital and i am staying in ahmednagar on rental basis. I have purchased another house in ahmednagar with borrowed capital in f.y. 2013-14 and got the possession in March 2014. till then i have stayed on rental basis and paid rent. I am earning rent on pune flat and claimed full interest on that loan. Please advise me on interest on loan for ahmednagar flat and HRA exemption. Can i claim full interest on ahmednagar flat or Rs. 1.50 lacs applicable to self occupied property. or can i show ahmednagar flat as deemed let out property with nil gross annual value and full deduction of interest amount which is above the limit of rs.1.50 lacs
Ankish Chaudhari, Sir this section gives the benefit only when we purchase or acquire house property, not for construction.
saravanan Sir, Yes you can’t avail.
Itee Sir, As you said your loan sanctioned before March,2013. So you are not able to get deduction u/s 80EE, However you can claim U/s 24(b).
Munde Dnyanoba Sir,Home loan taken first time not only the basis to get benefit of section 80EE. To get deduction we have to comply with all the specified conditions.
Thanks Krishna Krishnan.
1. I stay in a flat in Mulund which is in my father’s name. Now I am planning to buy a property jointly with my wife in thane or Mulund. We both plan to take a joint loan. I don’t intend to stay in the new flat and it’s for investment purpose. Will put the same on Rent.
a. Does the home I purchase, qualifies as Second Home.
b. Is there a restriction of Jurisdiction to qualify it as 2nd Home? Like is it necessary that both the houses shouldn’t be in the same city.
If yes it qualifies for the 2nd home, then
2. My Loan amount would be approx. 80 lacs
So will the below is legally advisable to save tax
a. Claiming HRA exemption on 1st flat (which is in fathers name)
b. Claiming total interest component as tax exempt (say 6lacs).
Also I suppose the income arising from rent of the 2nd home is taxable, i.e. 70% of Total rent (assuming 30% can be shown as Municipal taxes, repair and society maintenance). Can it be net off against the Interest paid on home loan? Also if it’s negative then can it be deducted from the taxable income?
Rent received annually 1.5 lacs
Minus Municipal tax, repair and maintenance 0.45 lacs
Net Rent Income Taxable 1.05 lacs
Minus Loan Interest Component 6 lacs
Net Income Taxable – 4.95 lacs
e.g
c. Can both (me and my wife) of us claim exemption on the 4.95lacs?? IF no, then it has to 50-50 or in the ratio of EMI paid?
d. Is it that, the second house gets no tax exemption on principal (1.5lacs)?. It receives only tax exemption on interest.
e. Can any amount that is left over may be carried forward in the tax return as loss from property to the next year? As years go by and the loan gets paid off, the interest component that is getting set-off against the rental income each year will keep on reducing. On the other hand, typically, the rent would tend to increase each year or at least once every 2-3 years. This will go on to lead to a positive differential between the rent received and the interest paid and this difference would be taxable. At this point, I Suppose the carried forward interest will be useful to reduce tax liability. (it is mandatory to file the tax return by July 31 (for individual taxpayers))
f. Even if the 2nd Home is not on rent and kept unoccupied do I need to pay tax on Notional Rent?
g. Additionally, if you give your second house on rent for more than 300 days in a year, it will not be subject to wealth tax, which is levied at the rate of 1% on wealth that is in excess of Rs 30 lakh?
h. In case the second house is under construction, 20% of the interest paid during the pre-construction phase is also allowed for tax exemption. However, this benefit needs to be taken within 5 years.??
Hello, As per my understanding, I am a fit case to avail section 80EE. My Loan Sectioned amount is Rs. 25 Lacs. Property value is 39 Lacs. Loan was sectioned in FY 2013-14. Now, I have following two questions:
1. Property is still under construction. Will it stop me availing 80EE benefit. The entire EMI is PRE EMI interest of Rs. 33,000.
2. If I am eligible for section 80EE, do I need to submit any document to IT Dept or just mention the deduction amount of PREEMI i.e., Rs. 33000.
Thanks in Advance.
Ankish
I was sanctioned home loan before march 31 2013 and fulfill all the criteria for claiming deduction under section 80 EE.
I have paid pre emi of Rs. 75000 in FY 2013-14 and i got the possession on March 30 2014.
How can I claim pre emi for AY 2014-15
Since my EMI starts in FY 2014-15, can i claim interest deduction under section 24b as well as 80EE in AY 2015-16
Sir,
I have taken home loan at first time in FEB-2014 from LICHFL of Rs.2490000/-fromPune and booked Flat for Rs.3500000/- on My & my sons name (joint Registery) Possession has been likely to be in Mar-2014.can cliam income tax benifit on intrest for me only
saravanan Sir, to get deduction of Sec-80EE, we have to comply with each & every condition,therefore you are not able to get benefit of section 80EE.