80EEA Deduction for Interest paid on home loan for affordable housing

Introduction

With the objective of “Housing for All”, Section 80EEA has been introduced by Finance Minister, Nirmala Sitharaman in the Budget 2019. The deduction offers various tax deductions on purchasing an affordable home. Under Section 80EEA of the Income Tax Act, 1961, the first-time home buyers avail an extra facility of relaxation in the income tax section. Here, first-time home buyers in India are eligible to earn an additional tax deduction of up to Rs. 1.5 Lakh. This deduction is over and above the deduction of Rs. 2,00,000 for interest payment under Section 24(b) of the Income Tax. Also, taxpayers shall also be eligible to claim a deduction under Section 80C of the Income Tax Act for principal repayment during the financial year. It means one can claim Section 80EEA including a deduction of Rs. 2,00,00 under Section 24(b) and deduction provided in Section 80C.

However, for availing of tax benefits as provided in Section 80EEA of the Income Tax, the first-time buyers need to follow some conditions. Let us know the conditions that are necessary to be fulfilled to claim the 80EEA deduction and other important information in this particular Section.

NOTE: – Section 80EE and Section 80EEA cannot be claimed together.

80EEA deduction eligibility

The deduction stated in 80EEA of the Income Tax Act, 1961 is applicable on individuals who are first-time buyers of the house property. And not applicable on Hindu Undivided Families (HUF), Association of Person (AOP), partnership firms, companies, Limited Liability Partnership (LLP), and any other kind of entity.

Also, one must not forget to make sure that the property must be bought with the help of a home loan from the bank or any financial institution.

Section 80EEA has not specified whether the taxpayer must be applicable to resident or non-resident. Therefore, it is evident that both the resident and non-resident Indians can claim the deduction 80EEA.

Conditions to be fulfilled to claim 80EEA deduction

Here are some of the conditions that are required to be fulfilled to claim 80EEA deduction amount, specifically: –

• The first and the prime condition must be, that the person should be first-time buyer of the house property.
• Secondly, the home loan sanctioned must be taken from a financial institution or a housing finance company for buying a residential house property.
• Third, date of sanctioning loan must be during 1^st April 2019 and 31^st March 2022.
• Fourth, the value of the residential property must not exceed Rs. 45 Lakh till March 31, 2022.
• Fifth, the stamp duty value of the house property should be less than Rs. 45,00,000.
• Sixth, the carpet area of the house needs to be under 60 sq. meters in the metropolitan cities of Bengaluru, Chennai, and Delhi NCR. Whereas in other cities, carpet area should not exceed 90 sq. meters.
• And lastly, the first-time buyer should not own any other house property on the date of sanction of home loan.