Section 80EE – Additional deduction for Home loan Interest

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Section 80EE allows you to claim additional deduction of Rs 50000 per year for interest payable on housing loan.

This deduction is available for individuals subject to following conditions:

  • Value of residential house does not exceed Rs. 50 Lakhs
  • Loan sanctioned does not exceed Rs. 35 Lakhs
  • Loan is sanctioned between the FY 1/4/2016 and 31/3/2017
  • 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

New clause

The deduction is allowed for up to Rs 50,000 per year, starting from FY 2016-17 and subsequent years, until the loan is repaid.

Old clause

This was started as 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)

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