Section 80EESection 80EE - Deduction on Home Loan Interest
Tax deduction under Section 80EE of the Income Tax Act 1961, can be claimed by
first-time home buyers for the amount they pay as interest on home loan. The
maximum deduction that can be claimed under this section is Rs. 50,000 during a
financial year. The amount can be claimed over and beyond the deduction of
Section 24 and Section 80C, which are Rs. 2, 00,000 and Rs. 1, 50,000,
Section 80EE was designed for the first time in the FY 2013-14 for individual
taxpayers to avail tax deduction on interest on home loans. At that time, the
maximum deduction that could be claimed was Rs. 1, 00,000. This tax benefit was
available for only two years - FY 2013-14 and FY 2014-15. The Section was
reintroduced on FY 2016-17, and the quantum of deduction was changed to Rs.
50,000 for interest paid towards home loan.
Terms for Claiming Section 80EE Deductions
The conditions associated with claiming deductions under Section 80EE are:
- This must be the first house that the taxpayer has purchased
- The value of the house should be Rs. 50 lakhs or less.
- The home loan availed should be Rs. 35 lakhs or less.
- Section 80EE allows deduction only for the interest portion of a home
- The home loan has been sanctioned by a Housing Finance Company or a
- As on the date of the loan sanction, the individual must not own another
- The loan should not have been availed for commercial properties.
- For claiming deductions under this section, the loan should have been
sanctioned between 01.04.16 to 31.03.17.
Eligibility for Claiming Section 80EE DeductionsTo become eligible for claiming 80EE deductions, a taxpayer has to make sure
of the following:
- Only individual taxpayers can claim deduction under Section 80EE on
properties purchased either singly or jointly. If an individual has bought a
property jointly with his or her spouse and they are both paying the
installments of the loan, then the two can individually claim this
- E tax benefits are not applicable for Hindu Unified Families (HUF),
Association of Persons (AOP), companies, trusts, etc.
- Tax benefits under Section 80EE can only be claimed by first-time home
buyers. In order to claim this deduction, the individual must have taken the
loan from a financial institution for buying his/her first residential house
- Section 80EE is applicable on a per person basis rather than a per
- To claim this benefit, it is not necessary for the taxpayer to reside in
the property for which he or she is claiming this deduction. Borrowers
living in rented homes can also claim this deduction.
Claiming 80EE Tax Deductions
A taxpayer can claim deduction under Section 80EE at the time of filing tax
To find out how much one can claim as deduction, here is what needs to be
- Calculate the total amount of interest that is paid during a financial
year on the home loan.
- Once the total interest amount paid is ascertained, claim deduction up
to Rs. 2, 00,000 (under Section 24 of Income Tax Act, 1961).
- The balance amount, up to Rs. 50,000, can be claimed under Section 80EE
of Income Tax Act, 1961.
Section 80EEASection 80EEA – Deduction for interest paid on home loan for affordable
Under the objective “Housing for all”, the government has now extended the
interest deduction allowed for low-cost housing loans taken during the period
between 1 April 2019 and 31 March 2020. Accordingly, a new Section 80EEA has
been inserted to allow for an interest deduction from AY 2020-21 (FY
2019-20).The existing provisions of Section 80EE allow a deduction up to Rs
50,000 for interest paid by first-time home buyers for loan sanctioned from a
financial institution between 1 April 2016 and 31 March 2017.
With a view to further the benefit and give impetus to the real estate sector,
the government has extended the benefit for the FY 2019-20. This deduction can
be claimed until you have repaid the housing loan.
Features of Section 80EEA
- Eligibility criteria
The deduction under this section is available only to individuals. This
deduction is not available to any other taxpayer. Thus, if you are a HUF, AOP,
Partnership firms, a company, or any other kind of taxpayer, you cannot claim
any benefit under this section.
- Amount of deduction
A deduction for interest payments up to Rs 1, 50,000 is available under Section
80EEA. This deduction is over and above the deduction of Rs 2 lakh for interest
payments available under Section 24 of the Income Tax Act. Read more about the
deduction of Rs 2 lakh on interest on home loan here. Therefore, taxpayers can
claim a total deduction of Rs 3.5L for interest on home loan, if they meet the
conditions of section 80EEA.
- Other conditions
Similar to Section 80EE, in order to claim deduction under Section 80EEA, you
should not own any other house property on the date of the sanction of a loan.
Conditions for claiming the deduction
Conditions with respect to the carpet area of the house property.
- Housing loan must be taken from a financial institution or a housing
finance company for buying a residential house property
- Stamp duty value of the house property should be Rs 45 lakhs or less.
- The individual taxpayer should not be eligible to claim deduction under
the existing Section 80EE.
- The taxpayer should be a first-time home buyer. The taxpayer should not
own any residential house property as on the date of sanction of the loan.
conditions have been specified in the memorandum to the finance bill, but not
mentioned in section 80EEA:
- Carpet area of the house property should not exceed 60 square meter (
645 sq ft) in metropolitan cities of Bangalore, Chennai, Delhi National
Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad),
Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region)
- Carpet area should not exceed 90 square meters (968 sq ft) in any other
cities or towns.
- Further, this definition will be effective for affordable real estate
projects approved on or after 1 September 2019.
Section 80EEA has been introduced to further extend the benefits allowed under
Section 80EE for low-cost housing. Earlier, Section 80EE had been amended from
time to time to allow a deduction for interest paid on housing loan for the FY
2013-14, FY 2014-15, and FY 2016-17.
The section does not specify if you need to be a Resident to be able to claim
this benefit. Therefore, it can be concluded that both Resident and Non-Resident
Indians can claim this deduction.
The section also does not specify if the residential house should be
self-occupied to claim the deduction. So, borrowers living in rented houses can
also claim this deduction. Moreover, the deduction can only be claimed by
individuals for the house purchases jointly or singly. If a person jointly owns
the house with a spouse and they both are paying the installments of the loan,
then both of them can claim this deduction. However, they must meet all the
conditions laid down.
Difference between Section 80EE and Section 80EEA
First-time buyers claiming deductions under Section 80EE cannot claim deductions
under Section 80EEA.
This is specifically mentioned in the law:
||Up to Rs 50 lakhs
||Up to Rs
||Up to Rs 35 lakhs
|Loan period covered
||April 1, 2016 to March 31, 2017
||April 1, 2019 to March 31, 2021
|Lock – in period