Sec 80EEA- Deduction in respect of Interest Payable on Loan taken for residential property

Assessee is an Individual and taken a loan for purchase of a residential property, here is the benefit on interest payable over and above deduction claimed u/s 24(b).

The above Section 80EEA is inserted by Finance Act, 2019 w.e.f 01.04.2019.

1) Eligibility

  • Assessee should be an Individual. Other taxpayers are not eligible for the deduction.
  • Should have taken a loan from any financial institution  for acquisition of residential property.

2) Conditions

  • Stamp duty value of the House < Rs 45 Lakhs.
  • Loan should be sanctioned during the PY 2019-20.
  • Assessee should not be eligible to claim deduction u/s 80E.
  • Assessee should not own any residential house on the date of sanction of Loan.

3) Period of Benefit

Benefit u/s 80EEA would be available from AY 2020-21 and onwards till repayment of loan continues.

4) Quantum of Deduction

  • Deduction u/s 80EEA shall not exceed Rs.1,50,000.
  • This deduction u/s 80EEA is over and above the deduction available u/s 24b in respect of interest payable on loan borrowed for acquisition of residential property.
  • In respect of Self Acquired property the deduction u/s 24(b) is limited to Rs.2,00,000. In case of let out property even though limit is not limited u/s 24(b), sec 71(3A) restricts the amount of loss from House Property to be set-off against any other head of income to Rs.2,00,000. So if interest payable on the borrowed money is more than Rs. 2,00,000 than the extra amount can be claimed u/s 80EEA.
  • For Example: 1st case: Total Interest payable on Loan is Rs. 3,20,000. Then, u/s 24(b) only Rs. 2,00,000 can claimed and the balance of Rs. 1,20,000 (3,20,000-2,00,000) can be claimed u/s 80EEA.
  • 2nd Case: Total Interest payable on Loan is Rs. 3,80,000. Then u/s 24(b) only Rs.2,00,000 can be claimed. U/s 80EEA also you can claim only Rs.1,50,000 not the balance amount of Rs. 1,80,000 (3,80,000-2,00,000).

5) No deduction under any other provision if claimed u/s 80EEA.

6) Meaning

i) Financial Institution:

a) a banking company to which Banking Regulations Act, 1949 applies; or

b) a Housing Finance Company; or

c) any bank or banking institution referred to in Section 51 of Banking Regulation Act, 1949.

ii) Housing Finance Company: a Public Company formed or registered in India with the main object of carrying on the business and providing long term finance for construction or purchase in India for residential purpose.

iii) Stamp Duty Value: Value adopted or assessed or assessable by any authority of the Central Government or a state Government for the purpose of payment of stamp duty in respect of an immovable property.

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One Comment

  1. Karan Sathe says:

    No deduction under any other provision if claimed under section 80 EEA.
    But we are also claiming u/s 24b and then 80EEA.
    Can you explain this?
    Also can we claim u/s 80 EEA instead 24b in the initial years because possession is not given,

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September 2021