Section 80EEA - Home Loan Deduction Benefits Explained
Under the initiative ‘Housing for all,’ the Government of India has extended the interest deduction benefit for low-cost housing loans obtained between 1 April 2019, and 31 March 2022.
Consequently, a new provision, Section 80EEA, has been introduced to permit interest deduction starting from Assessment Year 2020-21 (Financial Year 2019-20). The earlier provision under Section 80EE allowed a deduction of up to Rs.50,000 for interest paid by first-time homebuyers on loans sanctioned by financial institutions between 1 April 2016, and 31 March 2017.
Eligibility Criteria
Only individuals are eligible for the deduction provided under this section. It is not applicable to other entities such as HUFs, AOPs, partnership firms, companies, or any other taxpayer. Additionally, to claim the deduction under this section, the taxpayer must choose the old tax regime.
Like Section 80EE, to qualify for a deduction under Section 80EEA, you must not possess any other residential property on the date when the loan is sanctioned.
Conditions you need to fulfill to claim deductions under Section 80EEA
Given below are the conditions you will need to fulfill to claim deductions under Section 80EEA:
- Taxpayers must opt for the old tax regime when filing their income tax returns.
- The housing loan must be obtained from a financial institution or a housing finance company to purchase a residential property.
- The loan must be sanctioned between 1 April 2019, and 31 March 2022.
- The stamp duty value of the house property should not exceed Rs .45 lakh.
- The individual taxpayer should not be eligible to claim a deduction under the existing Section 80EE.
- The taxpayer must be a first-time home buyer and should not own any other residential property at the time of loan sanction.
- Specific conditions apply regarding the carpet area of the house property. In metropolitan cities like Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, and Mumbai, the carpet area should not exceed 60 square meters (645 sq ft), while in other cities or towns, it should not exceed 90 square meters (968 sq ft). The definition of carpet area applies to affordable real estate projects approved on or after 1 September 2019.
Section 80EEA extends the benefits provided under Section 80EE for low-cost housing. Previously, Section 80EE allowed deductions for interest paid on housing loans for fiscal years 2013-14, 2014-15, and 2016-17.
The section does not specify residency requirements, allowing both Resident and Non-Resident Indians to claim the deduction. Similarly, there is no requirement for the residential property to be self-occupied to claim the deduction, enabling borrowers living in rented houses to also avail of this benefit.
Additionally, individuals can claim the deduction for house purchases jointly or singly, provided they meet all specified conditions.
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