What is Section 80EEA of the Income Tax Act, 1961?

What is Section 80EEA of the Income Tax Act, 1961?

A new Section 80EEA has been inserted by the government to allow for an interest deduction from AY 2020-21 (FY 2019-20). The existing provisions of Section 80EE allow a deduction up to Rs 50,000 for interest paid by first-time home buyers for loan sanctioned from a financial institution between 1 April 2016 and 31 March 2017.

What is the Amount of Deduction?

The amount of deduction is available upto Rs. 1,50,000 under section 80EEA.

This deduction is available over & above the exemption u/s 24b provided other conditions satisfied.  Therefore, taxpayers can claim a total deduction of Rs. 3,50,000 for interest on housing loan, if they meet the conditions of section 80EEA.

Who is Eligible to claim deduction under section 80EEA?

The deduction under this section is available only to individuals. This deduction is not available to any other taxpayer. Thus, if you are a HUF  or AOP or Partnership firm or a company or any other kind of taxpayer, you cannot claim any benefit under this section.

What are the conditions to claim deduction under section 80EEA?

- The stamp duty value of residential house should be upto Rs. 45 lakhs.

- The loan should to be taken from bank or financial institution.

- The loan should be sanctioned between 1st April 2019 to 31st March 2020.

- Assessee should not claim any deduction under section 80EE.

- The taxpayer should be a first-time home buyer means the assessee should not own any residential house property on the date of sanction of loan.

Other important points

- The joint owner can claim deduction of Rs. 1.5 lakh each

- The benefit of deduction under this section would be available from AY 2020-21 and subsequent years till the repayment of loan continues

- Carpet area of house property should not exceed 60 sq. mtr. (645 sq ft) in metropolitan cities including Delhi NCR and carpet area not exceed 90 sq. mtr.(968 sq ft) in any other cities.

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:

· Carpet area of the house property 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)

· Carpet area should not exceed 90 square meter (968 sq ft) in any other cities or towns.

· Further, this definition will be effective for affordable real estate projects approved on or after 1 September 2019

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