Section 80EEA of Income Tax Act: Additional deduction of interest payment in respect of housing loan (Co-related with Section 80EE & Section 24b of the Income Tax Act)
A new Section 80EEA has been inserted by government to allow for an interest deduction from AY 2020-21 (FY 2019-20). The existing provisions of Section 80EE allow a deduction up to Rs 50,000 for interest paid by first-time home buyers for loan sanctioned from a financial institution between 1 April 2016 and 31 March 2017.
The amount of deduction available under this section shall be calculated in the following manner, whichever is lower: –
Actual Interest payment OR Rs. 1,50,000/-
This deduction is available over & above exemption u/s 24b provided other conditions satisfied.
Therefore, taxpayers can claim a total deduction of Rs 3.50 Lakhs for interest on housing loan, if they meet the conditions of section 80EEA.
Who is Eligible
♦ Only Individual assessee.
Example1: Mr. Bhaskar has taken a home loan during FY 2019-20. The stamp duty value of the house is Rs. 53 lakhs. Total interest payment made during the year is Rs. 3,24,000/-. Whether Bhaskar is eligible to claim deduction under section 80EEA?
Reply: stamp duty value of the house exceeds Rs. 45 lakhs hence Bhaskar is not eligible to claim deduction under section 80EEA.
However, he can claim exemption of interest u/s 24b of Rs. 2,00,000/-
Example 2: Mr. Suraj has taken home loan. Given below are the information:
|S. No.||Total Interest||Loan Year||Deduction u/s 24b||Deduction u/s 80EE||Deduction u/s 80EEA|
|1||Rs. 4,50,000||FY 2016-17||Rs. 2,00,000||Rs. 50,000||NA|
|2||Rs. 3,00,000||FY 2018-19||Rs. 2,00,000||NA||NA|
|3||Rs. 3,20,000||FY 2019-20||Rs. 2,00,000||NA||Rs. 1,20,000|
|4||Rs. 4,00,000||FY 2019-20||Rs. 2,00,000||NA||Rs. 1,50,000|
Section 24b: Under this section, exemption of interest payment on home loan maximum upto Rs. 2,00,000 under house property income is available subject to certain conditions.
Section 80EE: Deduction on the interest of a home loan under this section is available. The maximum deduction available as per this section is Rs. 50,000/- subject to certain conditions:
♦ Value of house should be up to Rs. 50 lakhs
♦ Loan amount should not exceed Rs. 35 lakhs
♦ Loan must be sanctioned between 01-April-2016 to 31-March-2017
Compiled by: –
CA Ayush Agarwal
CA Piyush Agarwal