Section 80EE of the Income Tax Act | Section 80EE is a tax exemption provided under the Income Tax
Act which is Rs. 50,000 a year with interest paid towards the purchase of your first home.
Budget 2023 under Section 80EE:
When calculating the capital gain on the sale of a residential property, the owner’s cost of the property does not include interest on the mortgage loan. This is the total amount claimed as deductions during the holding period of the property.
The provisions of section 80EE
Here are the highlights of Section 80EE
of the Income Tax Act, of 1961:
|
Features |
Details |
|
Eligibility |
Only first-time homebuyers |
|
Exclusions |
HUF/ Company/ Factory building |
|
Property Ownership |
On the date of loan sanctioning, the taxpayer should not own any other house property except on which the home loan is taken The taxpayer should own the residential house property on which the loan is taken |
|
Employment Status |
Available to both salaried and self-employed individuals |
|
Maximum Deduction |
Rs. 50,000 |
|
Loan Amount |
The loan amount should not exceed Rs. 35 lakh |
|
Additional Deduction |
Deduction u/ Section 80EE is in addition to the deduction of Rs. 2 lakhs available under Section 24 of the IT Act |
|
Loan Amount |
Deduction only on loans taken to buy a residential house property |
|
Property Value |
The value of the property should not exceed Rs. 50 lakh |
|
Loan Issuing Authority |
Financial Institutions Housing Finance Company |
|
Tax Claim for Joint House Ownership |
If both owners pay joint ownership of the house and loan installments: Both the joint owners can claim a deduction under Section 80EE |
Income Tax relief U/s 80EE, section 80C and section 24(b)
Provided under u/Sec 80EE, Sec 80C, Sec
24 of the Income Tax Act.
|
Section 80EE |
Section 80C |
Section 24 |
|
Rs. 50,000 on home loan interest payments for first-time home buyers, this is in addition to discounts of up to Rs. 2 Lakh U/Sec 24 Hence, the exemption limit u/Sec 24 should first be deleted before claiming exemption under Section 80EE, |
Rs. 1.5 Lakh in investments in special tax saving instruments like Public Provident Fund (PPF), Equity Linked Savings Schemes (ELSS), and National Savings Certificate (NSC). |
Credit is Rs. 2 lakh on payment of interest on housing loan taken for purchase, construction, or renovation of residential property, the personal property only |
Exemptions under section 80EE, section
80C and section 24
|
Particulars |
Deductions Available On |
Tax Deductions (in Rs.) |
|
|
Self-Occupied Residential Property |
Rental Residential Property |
||
|
Section 24 |
Interest on Home Loan |
Rs. 2 Lakhs |
No Limit |
|
Section 80C |
Principal Home Loan Amount |
Rs. 1.5 Lakhs |
Rs. 1.5 Lakhs |
|
Section 80EE |
Interest on Home Loan |
Rs. 50,000 |
Rs. 50,000 |
Section 80EEA of the Income Tax Act provides that an additional fee of up to Rs. 1.5 lakh for interest payable on home loans taken for the purchase of a first home.
Contents of Section 80EEA:
• A section has been included in the Union Budget 2019-20 to promote the affordable housing sector.
• This will encourage first-time buyers to buy their first home.
The taxpayer should not be able to use the u/80EE section.
• Exemption is available for loans sanctioned from April 1, 2019, to March 31, 2022.
• Assets worth Rs. 45 Lakh.
Tax deductions should only be claimed for the purchase of your first home.
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