Deduction in respect of interest on loan taken for residential house property

Deduction under Section 80EE from Assessment Year 2017-18 As per Section 80EE of the Income-tax Act, deduction of up to Rs. 50,000 is allowed to an
Individual towards interest on loan taken for acquisition of a residential house property. However, the deduction is allowed subject to following conditions::
a. the loan should be sanctioned by the financial institution during the period beginning on the 01-04-2016 and ending on 31-03-2017;
b. the amount of loan should not exceed Rs. 35 lakhs;
c. the value of residential house property should not exceed Rs. 50 lakh; and
d. the assessee should not own any residential house property on the date of sanction of loan.

Deduction under Section 80EEA for Individuals who are not eligible for deduction under Section 80EE
With an objective to provide an impetus to the ‘Housing for all’ initiative of the Government and to enable the home buyer to have low-cost funds at his disposal, the Finance (No. 2) Act, 2019 has inserted a new Section 80EEA under the Income-tax Act for those individuals who are not eligible to claim deduction under Section 80EE. An individual can claim deduction of up to Rs. 150,000 under section 80EEA subject to following conditions:
(a) Loan should be sanctioned by the financial institution during the period beginning on 01-04-2019 and ending on the 31-03-2021;
(b) Stamp duty value of residential house property should not exceed Rs. 45 lakhs;
(c) The assessee should not own any residential house property on the date of sanction of loan; and
(d) The assessee should not be eligible to claim deduction under Section 80EE.
Hence, an individual who does not meet the criteria of section 80EE shall be eligible to claim deduction under section 80EEA of up to Rs. 150,000 in addition to deduction under section 24(b).

The Finance Act, 2021 has amended Section 80EEA to extend the outer date for sanction of loan from 31-03-2021 to 31-03-2022. Thus, the deduction shall continue to be available under this provision if the loan is sanctioned on or before 31-03-2022.

You may contact the author for further information at 9899595719 or taxwizersconsultant@gmail.com

Disclaimer: The above article is only for information purpose and is on based on the author’s interpretation of the relevant provision. The same should not be considered as professional advice.