Deduction under 80EEA is launched in Union Budget 2019 that provides additional tax deduction benefits of up to INR 1.5 lakh in against the home loan expenses to the first time home buyers who are purchasing ‘Affordable House’ under Government’s ‘Housing for All by 2022’ mission. The benefit of 80EEA is applicable from AY 2020-21 for those buyers who are purchasing property between April 1, 2019 and March 31, 2020, over and above the benefits in against home loan interest expenses, such as, Section 24(b). This means, INR 1.5 lakh can be claimed by a taxpayer u/s 80EEA in addition to the maximum allowed deduction amount of INR 2 lakh in a FY for home loan interest as per the provision of Section 24(b).
Who is Eligible to Avail 80EEA Deduction Benefit?
- This benefit is applicable for First Time home buyers ONLY.
- ONLY individuals, buying the house either single or jointly, can avail this deduction benefit for interest payment of up to INR 1.5 lakh over and above the permissible deduction for home loan interest allowed under Section 24(b). If the property is owned jointly, both the buyers can opt for the benefit, if they meet all the criteria.
- HUF, AOP, Partnership Firm, Company, any Other Taxpayers DO NOT come under the benefit permitted in 80EEA.
- First-Time buyers who have claimed 80EE deduction benefit of up to INR 50,000 for home loan CANNOT avail for 80EEA deduction.
- The provision is applicable for both Residents and Non-Residents.
- ONLY those buyers who are purchasing the ‘Affordable Houses’ of value up to INR 45 lakh can avail the deduction benefit for the home loans that are sanctioned between April 1, 2019 and March 31, 2020.
Conditions for Availing 80EEA Deduction
- Borrowers should avail the home loan between April 1, 2019 and March 31, 2020 for their first house property.
- Home Loan can be availed from a financial institution (banks, housing finance companies) and not from family members, relatives or friends.
- Stamp duty of the property should not be more than INR 45 lakh.
- The provision is allowed ONLY for purchasing new residential house property for the first time and not applicable for reconstruction, repair, maintenance, etc.
- It is not necessary that the House Property for which 80EEA deduction for Home Loan Interest is availed should be self-occupied. Assessee living in a rented house can also claim 80EEA deduction (allowed with HRA benefits). But the assessee should not own any other house property on the date of sanction of loan.
- Size limit of the property:
- If the property is located in metropolitan cities, that are Bengaluru, Chennai, Delhi, Faridabad, Ghaziabad, Greater Noida, Gurugram, Hyderabad, Kolkata, Mumbai and Noida, its size should not exceed 645 sq ft or 60 sq metres.
- If the property is located in other cities, its size should not exceed 968 sq ft or 90 sq metres.
- The definition will be effective for affordable real estate projects approved on or after September 1, 2019.
80EEA deduction benefit is available especially to ease the buyers of low-cost housing segment, where they get opportunity of both 24(b) and 80EEA benefits as given below:
|Category||Section 24(b)||Section 80EEA|
|Loan Source||Bank/Personal||Banks only|
|Max. Deduction Allowed||INR 2 lakhs (if self occupied or vacant)/whole interest amount (if let out)||INR 1.5 lakh|
|Value of the Property||Not specified||Up to INR 45 lakh|
|Loan Booking Time||After April 1, 1999||Between April 1, 2019 and March 31, 2020|
|Buyer Category||All home buyers||First-time individual home buyers (residents|
Mr. KG incurred an Interest Expense of Rs. 300000/- on the amount borrowed for acquisition of one Residential House Property in delhi . What are the deductions available to him for the A.Y 20-21 w.r.t Interest Expense?
Mr. KG can claim deduction with respect to Interest Expense as follows:
- Interest 200000/- can be claimed in Sec.24(b)
- Balance interest Rs.100000/- can be claimed in Sec.80EEA.
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