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Section 80EE – Additional deduction for Home loan Interest

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Section 80EE allows you to claim additional deduction upto Rs 1 lakh for interest payable on housing loan.

This deduction is available for individuals for AY 2014-2015 (FY 2013-2014) subject to following conditions:

  • Value of residential house does not exceed Rs. 40 Lakhs
  • Loan sanctioned does not exceed Rs. 25 Lakhs
  • Loan is sanctioned between the FY 1/4/2013 and 31/3/2014.
  • Assessee is a first time home buyer.
  • Assessee does not own any other residential house as on the date of sanction of the loan. This house is supposed to be his self occupied property
  • Loan must be from eligible financial institution – must be either a bank, or a “public company” formed with the main object of providing long term housing finance (registered with NHB). 

Points to Note

This is ONE time deduction. Interest payable upto Rs 1 lakh will be allowed as deduction in Assessment year 2014-2015 (FY 2013-2014).  If the interest payable is less than Rs 1 lakh, the balance can be claimed in AY 2015-2016.

Under this new Section 80EE, first time home buyers will be able to save upto Rs 30,000  (30% on Rs 1 Lakh)

Section 80EE & Section 24 – Interest on Housing Loan

1)   Section 80EE says “ It is also provided that where a deduction under this section is allowed for any assessment year, in respect of interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provisions of the Income-tax Act for the same or any other assessment year.”

However as per Finance Bill , 2013 contain an announcement of additional deduction of interest on housing loan for first time buyer state that-

I propose to allow such home buyers an additional deduction of interest of Rs.100000/- to be claimed in A.Y.2014-15. If the limit is not exhausted, the balance may be claimed in A.Y.2015-16. This deduction will be over and above the deduction of Rs.150000/-allowed for self occupied properties under section 24 of the income tax Act.”

So as per above explanation there is difference between section 80EE(4) and as per announcement under para 132.

So, I think, assessee may claim additional deduction u/s 80EE apart from deduction under Section 24 of Income Tax Act.

Under-Construction properties

Dedcution u/s 80EE can be claim even for under-construction properties.  

As per Section 24(b), interest is accumulated upto the period of construction and deduction is allowed in 5  instalments to extent of Rs. 1.50 lakhs after the completion of construction period. ( upto Rs 2 lakhs from AY 2015-2016)

If you have any queries related to this article or any other personal finance query ( Investment, Taxation etc), please comment below

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12 comments

  1. Hi vivek,

    As we can claim up to 2 lakh for self occupied property. But you stated above that “RS 150000/- Allowed for self occupied property.”
    Can you clarify?

    One more thing: Suppose i am buying my first house and satisfying all criteria for section 80EE. i have taken 20L loan with 10% annual interest rate.
    per annum i am giving 2L interest on my loan.
    CAN i can claim 2 L under home loan(don’t know the section :P). And additional 1L under section 80EE ??

    • Hi Pawan, that was the commentary from Finance bill 2013. In Finance bill 2014, the limit is increased to Rs 2 lakh for Self occupied property. this will be applicable for AY 2015-2016.

      If you are thinking for buying a new home now, you may not qualify for Sec 80EE deduction. pls check if you can satisfy the conditions as it was mainly applicable for FY 2013-2014. The Loan should have been sanctioned before 31-3-2014.

      2) You cannot claim the deduction more than Interest paid. If you are paying home loan interest of Rs 2 lakh in an year, you can claim only Rs 2 lakh. You can’t claim 3 lakh.

      If you are paying Rs 1 lakh as Interest, you can claim only 1 lakh ( and not 2 lakh)

  2. Sir,
    would u pls clearify that i have bought my new house after just selling first, now i have only one house then, am not iI elligible for examption in home loan interest ?

    • Hi Hem,

      Please explain which Interest deduction are you talking about?
      80EE deduction is allowed only if the loan is sanctioned between the FY 1/4/2013 and 31/3/2014.

  3. Hello Sir,

    I bought a house in 2011. My interest component was getting deducted under 80EE till last year. But now suddenly they are saying it is not possible to claim under 80EE. Why was it… Please help.

    • Hi Venkatesh, When did you take the loan? If you bought property in 2011 and took the loan in 2011, deduction u/s 80EE is not allowed.

      Please see the 80EE conditions in the post above.

  4. Hello Sir,
    Kindly advise me that how can I claim deduction on interest paid on home loan during FY 2015-16. Also pls advise the relevant section of Income Tax Act under which it can be claimed.

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