Section 80EE Income Tax Deduction for Interest on Home Loan
Income tax advantages are permitted under Section 80EE for the interest component of residential property loans obtained from any financial institution. In accordance with this clause, you are eligible to deduct up to Rs 50,000 every fiscal year. Until the debt is all returned, you may keep deducting this amount.
Only taxpayers who have serviced a house loan between April 1, 2016, and March 31, 2017, are eligible to claim 80EE.
What are the Features of 80EE Deduction?
Eligibility requirements: Only persons are eligible for the deduction under this provision. This implies that whether you are a firm, an AOP, a HUF, or any other type of taxpayer, you are not eligible to receive the benefit under this provision.
Limit: A deduction of up to Rs 50,000 may be made. It exceeds the Rs 2 lakh threshold set forth in Income Tax Act Section 24.
Additional requirements: At the time of the financial institution's loan approval, you must not have owned any other real estate in order to be eligible for this deduction.
Note: Only if the person chooses to use the previous tax system may they claim this deduction.
Requirements to fulfill in order to claim a deduction
The residence should be worth no more than Rs 50 lakh.
The amount borrowed for the home shall not exceed Rs 35 lakh.
A financial institution or a home financing firm must approve the loan.
The loan must be approved between April 1, 2016, and March 31, 2017.
You cannot own any other residential property as of the loan sanction date.
Important points that need to be taken into consideration
In the 2013–14 fiscal year, Section 80EE went into force. Only two years—FY 2013–14 and FY 2014–15—were it accessible. The previous deduction that was permitted was only available for two fiscal years and could not exceed a total of Rs 1 lakh.
Reintroducing this part, however, will take effect in FY 2016–17 (AY 2017–18). Up to Rs 50,000 can now be deducted annually till the debt is paid back.
It is unclear from this section if residency is required in order to get this benefit. Thus, it may be said that Indians who are residents or who are not may claim this deduction.
It's also unclear from this part if this home has to be self-occupied in order to qualify for the deduction. Therefore, debtors who are renters are eligible to deduct this as well.
Additionally, people may claim the deduction individually or jointly for home purchases. If they are both making loan payments, both the spouse and the individual jointly owning the home are eligible to claim this deduction.
The deduction permitted by Section 80EE is not permitted under the current tax system.
Section 80EE and Section 24
Be fast to claim the advantages if you are able to meet the requirements of both Section 24 and Section 80EE of the Income Tax Act.
First, use up the entire Rs. 2 lakh deductible limit under Section 24.
Proceed to assert the extra benefits according to Section 80EE.
Thus, this deduction is in addition to the maximum of Rs 2 lakh permitted under Section 24.
Section 80EE and Section 80EEA
The Union Budget 2019 created a new Section 80EEA to prolong the tax advantages of the interest deduction up to Rs 1,50,000 for housing loans obtained for affordable housing from 1 April 2019 to 31 March 2022. The individual taxpayer should not be eligible for a Section 80EE deduction and should be a first-time home buyer.
The following table can be used to understand the differences between Section 80EE and Section 80EEA:
| Difference Basics |
Section 80EE |
Section 80EEA |
| Loan sanction period* |
01-04-2016 to 31-03-2017 |
01-04-2019 to 31-03-2022 |
| Deduction allowed on interest paid |
Rs.50,000 |
Rs.1,50,000 |
| Loan amount limit |
Rs.35,00,000 |
No Limit |
| Value of the house |
Rs.50,00,000 (Actual Value) |
Rs. 45,00,000 (Stamp duty value) |
*Only if the loan was taken out during the specified times is a deduction permitted.
FAQs
The only borrowers eligible for a rebate under Section 80EE are those whose loans were approved between April 1, 2016, and March 31, 2017. On the other hand, you can deduct up to Rs. 1,50,000 for interest paid on the loan under section 80EEA if you borrowed it between April 1, 2019, and March 31, 2022, solely under the previous tax system.
However, under section 24, one may deduct up to Rs. 2,00,000 under house property income.
The first-time buyer of residential real estate is eligible for the deduction under Section 80EE of the legislation. On the day the loan is approved by the financial institution, they shouldn't own another home. Therefore, the deduction under Section 80EE on the first property can still be claimed if a second house is later acquired.
Residency on the same property as the benefit is not necessary in order to claim a deduction under Section 80EE. Even if the borrower lives in a leased home, he is still eligible to claim the deduction.
For self-occupied property, Section 24(b) allows a deduction of Rs 2 lakh, while for let-out property, the whole interest is deductible.
But according to Section 80EE, you can only deduct an extra Rs 50,000 under Section 80EE after you've used up all of Section 24(b). It is available to first-time homebuyers and loans approved by financial institutions between April 1, 2016, and March 31, 2017.
No, a single taxpayer is eligible to claim the deduction under Sections 80EE and 80EEA, depending on their specific qualifying requirements. The housing loan must be used within a certain window of time. Since it doesn't overlap, it cannot be claimed concurrently.
Indeed. In addition to the Rs. 200,000 deduction permitted by Section 24(b), a deduction of Rs. 50,000 may be taken.
No, deduction under Section 80EE cannot be claimed if the taxpayer opts for the new tax regime.
