Budget 2020: Extending time limit for sanctioning of loan for affordable housing for availing deduction under section 80EEA of the Act to 31st March, 2021.
The existing provisions of section 80EEA of the Act provide for a deduction in respect of interest on loan taken from any financial institution for acquisition of an affordable residential house property. The deduction allowed is up to one lakh fifty thousand rupees and is subject to certain conditions. One of the conditions is that loan has been sanctioned by the financial institution during the period from 1st April, 2019 to 31st March, 2020.
The said deduction is aimed to incentivise first time buyers to invest in residential house property whose stamp duty does not exceed forty-five lakh rupees. In order to continue promoting purchase of affordable housing, the period of sanctioning of loan by the financial institution is proposed to be extended to 31st March, 2021.
This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years.
[Clause 32]
Extract of Relevant Clauses of Finance Bill,2020
Clause 32
Clause 32 of the Bill seeks to amend section 80EEA of the Income-tax Act relating to deduction in respect of interest on loan taken for certain house property.
The aforesaid section 80EEA, inter alia, provides for deduction in respect of interest on loan taken for a residential house property from any financial institution up to one lakh fifty thousand rupees subject to the condition that the loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2019 and ending on the 31st day of March, 2020. This is subject to further condition that the stamp duty value of residential house property does not exceed forty-five lakh rupees and the assessee does not own any residential house property on the date of sanction of loan.
It is proposed to amend the said section so as to provide that the deduction under the said section in respect of interest paid on loan sanctioned by a financial institution for acquisition of a residential house property, shall be available if the loan has been sanctioned during the period beginning on the 1st day of April, 2019 and ending on the 31st day of March, 2021, subject to other conditions specified in the said section.
This amendment will take effect from the 1st day of April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.
Extract of Relevant Amendment Proposed by Finance Bill, 2020
32. Amendment of section 80EEA.
In section 80EEA of the Income-tax Act, in sub-section (3), in clause (i), for the figures “2020”, the figures “2021” shall be substituted with effect from the 1st day of April, 2021.
