Claim Income Tax Benefit On Home Loan
Income Tax
Benefit On Home Loan
Deduction of
Interest paid on Home Loan for Affordable Housing
Do you know you can save 3.5 lakhs on your dream home.
“Housing for all” is the
Dream Project launched by PM Shri
Narendra Modiji in 2015 under National Mission for Urban Housing, with only one
mission to provide House to every citizen of the Country. Under the above
objective, 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. Along with the existing Section 80EE that 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 ₹50,000 for
interest paid by first-time home buyers for loan sanctioned from a financial
institution. With a view to extend the benefit and give boost 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.
Let us discuss the features
of this Section.
1. Features of Section 80EEA
a) Eligibility criteria
The deduction can be claimed only by the
individuals under this section. Any other taxpayer cannot avail any deduction. This
means, if you are a HUF, AOP, Partnership firm, a company, or any other kind of
taxpayer, you cannot claim any benefit under the section 80EEA.
b) Amount of deduction
An individual can avail the deduction for
interest payments up to ₹1,50,000 under Section 80EEA. This deduction is over
and above the deduction of ₹2 lakh for interest payments available under
Section 24 of the Income Tax Act. Therefore, taxpayers can claim a total
deduction of ₹3.5L for interest on home loan, if they meet the conditions of
section 80EEA.
c) Other conditions
In order to claim deduction under
Section 80EEA, an individual should not own any other house property on the
date of the sanction of a loan.
Now the question comes How to Claim
this Deduction? Are there any conditions for claiming the deduction? Let us see
below
2. Conditions for claiming the deduction
- An individual must take the housing loan from a
financial institution or a housing finance company for buying a
residential house property.
- The Registration value of the house property should be ₹45 lakhs or less. The Stamp duty value of the house should be ₹45 lakhs or
less.
- Under the existing Section 80EE, the individual taxpayer
should not be eligible to claim deduction.
- The deduction can only be claimed only if the taxpayer is
first-time home buyer. The taxpayer should not own any residential house
property as on the date of sanction of the loan.
Apart from the above conditions which are with
respect to taxpayer individual there are also conditions with respect to the
carpet area of the house property. These conditions have been specified in the
memorandum to the finance bill, but not mentioned in section 80EEA:
- The Carpet area of the house property (remember the
carpet are neither built-up area nor super built-up area) should not
exceed 60 square meter ( 645 sq ft) in metropolitan cities of Bengaluru,
Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater
Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai
(whole of Mumbai Metropolitan Region)
- For cities other than the one mentioned in the above
appoint Carpet area should not exceed 90 square meter (968 sq ft).
- 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. In
the section 80ee it is not specified 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.
If the property is owned jointly by husband and his spouse and loan instalments
are being paid by both of them, then the deduction can be claimed by both of
them. However, all the conditions must be satisfied in order to claim.
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