Section 80EEA- Deduction On Home Loan Taxes- Save Upto 3 Lacs

Home loans

Did you know? that first-time homebuyers in India enjoy additional deductions on tax if they buy the property with the assistance of home loans? Specific provisions are made within the tax Act, 1961, to supply exemption to first-time homebuyers for purchase of affordable homes, over and above the advantages enjoyed by other categories of buyers. These include benefits under Section 80EEA and Section 80EE.

the introduction of Section 80EEA

In its first stint that started in 2014, the prime minister Narendra Modi-led NDA government launched its pet ‘Housing for All by 2022’ programme. so on finish that ambitious target, the central government propelled a few measures to empower first-time home purchasers.The introduction of Section 80EEA in 2019, was a stage toward that path.

the introduction of Section Section 80EEA of the Income Tax Act?

Section 80EEA was introduced by the minister of finance Nirmala Sitharaman within the 2019 Union Budget with an aim to offer a lift to the center’s ‘Housing for All by 2022’ program, by way of offering additional tax benefits on the acquisition of affordable homes.

“In computing the entire income of an assessee, being a private not eligible to say deduction under Section 80EE, there shall be deducted, in accordance with and subject to the provisions of this section, interest payable on loan taken by him from any financial organization for the aim of the acquisition of a residential house property,” reads Section 80EEA.

What is The Guidelines Section 80EEA?

a) Eligibility criteria

The deduction under this section is out there only to individuals. This deduction isn’t available to the other taxpayer. Thus, if you’re a HUF, AOP, Partnership firm, a company, or the other quite taxpayer, you can’t claim any benefit under this section

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b) Amount of deduction

A deduction for interest payments up to Rs 1,50,000 is out there under Section 80EEA. This deduction is over and above the deduction of Rs 2 lakh for interest payments available under Section 24 of the tax Act. Read more about the deduction of Rs 2 lakh on interest on home equity credit here. Therefore, taxpayers can claim a complete deduction of Rs 3.5L for interest on home equity credit, if they meet the conditions of section 80EEA.

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c) Other conditions

Similar to Section 80EE, so as to say deduction under Section 80EEA, you ought to not own the other house property on the date of the sanction of a loan.

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What Are The Conditions For Claiming The Deduction?

  • Housing loans must be taken from a financial organization or a housing nondepository financial institution for purchasing a residential house property.
  • Stamp duty value of the house property should be Rs 45 lakhs or less.
  • The individual taxpayer shouldn’t be eligible to say deduction under the prevailing Section 80EE.
  • The taxpayer should be a first-time buyer. The taxpayer shouldn’t own any residential house property as on the date of sanction of the loan.

Conditions with reference to the carpet area of the house property. These conditions are laid out in the memorandum to the finance bill, but not mentioned in section 80EEA:

  • The carpet area of the house property shouldn’t exceed 60 square meters ( 645 sq ft) in metropolitan cities of Bengaluru, Chennai, Delhi capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (the whole of Mumbai Metropolitan Region)
  • The carpet area shouldn’t exceed 90 square meters (968 sq ft) in other cities or towns.
  • Further, this definition is going to be effective for affordable land projects approved on or after 1 September 2019

The carpet area of the house property shouldn’t exceed 60 square meters ( 645 sq ft) in metropolitan cities of Bengaluru, Chennai, Delhi capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (the whole of Mumbai Metropolitan Region)

The carpet area shouldn’t exceed 90 square meters (968 sq ft) in other cities or towns.

Further, this definition is going to be effective for affordable land projects approved on or after 1 September 2019

 

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Section 80EEA and Section 24

Under Section 24, homeowners can claim a deduction for interest payments up to Rs 2 lakh on their home equity credit , if the owner or his family resides within the house property. The deduction of up to Rs 2 Lakh applies even when the home is vacant. If you’ve got rented out the property, the whole home equity credit interest is allowed as a deduction.

If you’re ready to satisfy the conditions of both Section 24 and Section 80EEA of the tax Act, you’ll claim the advantages under both the sections. First, exhaust your deductible limit under Section 24, which is Rs 2 lakh. Then, continue to say the extra benefits under Section 80EEA. Therefore, this deduction is additionally to the Rs 2 lakh limit allowed under Section 24. 

Under Section 24, homeowners can claim a deduction for interest payments up to Rs 2 lakh on their home equity credit , if the owner or his family resides within the house property. The deduction of up to Rs 2 Lakh applies even when the home is vacant. If you’ve got rented out the property, the whole home equity credit interest is allowed as a deduction.

If you’re ready to satisfy the conditions of both Section 24 and Section 80EEA of the tax Act, you’ll claim the advantages under both the sections. First, exhaust your deductible limit under Section 24, which is Rs 2 lakh. Then, continue to say the extra benefits under Section 80EEA. Therefore, this deduction is additionally to the Rs 2 lakh limit allowed under Section 24.

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