Buying a home is a dream for many Indians, but let’s face it—property prices aren’t exactly cheap. Fortunately, the Income Tax Department provides multiple housing loan benefits, making homeownership more affordable. One such benefit is Section 80EEA, which offers a tax deduction on the home loan interest paid.
Section 80EEA is a fantastic tax-saving opportunity for first-time homebuyers in India. If you’re planning to buy a home under ₹45 lakh, this additional deduction, along with benefits from Section 24(b), Section 80C, and PMAY, can help you reduce your taxable income significantly.
If you’re planning to buy your first house, this section can help you save a significant amount on your taxable income while also benefiting from schemes like Pradhan Mantri Awas Yojana (PMAY) and the Credit Linked Subsidy Scheme (CLS)
What is Section 80EEA of Income Tax Act?
Section 80EEA of the Income Tax Act provides additional tax deductions on interest paid on home loans, specifically for first-time homebuyers. This deduction was introduced in Budget 2019 to promote affordable housing under government initiatives such as the Affordable Housing Scheme.
Purpose of Introducing This Section
The government introduced Section 80EEA to:
• Boost home ownership among middle-class and lower-income individuals.
• Encourage people to invest in real estate and take advantage of housing tax benefits.
• Complement existing tax benefits available under Section 24(b) and Section 80C.
Eligibility Criteria for Section 80EEA
Who Can Claim This Deduction?
To claim benefits under Section 80EEA:
• The taxpayer must be an individual (companies, HUFs, or partnerships are not eligible).
• The taxpayer should not own any other residential property at the time of loan sanction.
Conditions to Qualify
• Loan Sanction Date: The home loan must be sanctioned between 1st April 2019 and 31st March 2022.
• Property Value Limit: The stamp duty value of the house should not exceed ₹45 lakh.
• Loan from a Recognized Institution: The loan must be taken from a bank, housing finance company, or other recognized institutions.
Tax Deduction Benefits Under Section 80EEA
Under Section 80EEA, you can claim a maximum deduction of ₹1.5 lakh per financial year on the home loan interest paid. This is over and above the ₹2 lakh deduction available under Section 24(b). If you’re also investing in Section 80C, your tax planning can be optimized further.
Comparison with Other Sections
Difference Between 80EEA and 24(b)
• Section 24(b): Allows a deduction of ₹2 lakh on home loan interest but only for self-occupied properties.
• Section 80EEA: Provides an additional deduction of ₹1.5 lakh but only for first-time homebuyers.
Can You Claim Both 80EEA and 24(b)?
Yes! If you meet the eligibility criteria, you can claim ₹3.5 lahks (₹2 lahks under 24(b) + ₹1.5 lahks under 80EEA) in tax deductions on your home loan interest paid.
How to Claim Deduction Under Section 80EEA?
Required Documents
To claim the deduction, you need:
• Home loan sanction letter from the bank or housing finance company.
• Property purchase documents verifying stamp duty and registration.
• Interest certificate from the lender, showing how much interest you’ve paid in the financial year.
Step-by-Step Process
Check Eligibility
Ensure you meet all the conditions.
Get Documents Ready
Collect the necessary documents.
File ITR Correctly
While filing your Income Tax Return (ITR), claim the deduction under Section 80EEA by including it in your tax filing process.
Example Calculation for Section 80EEA
Let’s say:
• You take a home loan of ₹40 lakh at 7% annual interest.
• Your annual interest payment is ₹2.8 lakh.
• Under Section 24(b), you claim ₹2 lakh.
• The remaining ₹80,000 can be claimed under Section 80EEA.
Thus, your total tax deduction = ₹2 lakh (24b) + ₹80,000 (80EEA) = ₹2.8 lakh!
Limitations and Restrictions of Section 80EEA
Can NRIs Claim This Deduction?
No, only resident individuals can claim this benefit.
What If the Property Value Exceeds the Limit?
If the stamp duty value exceeds ₹45 lakh, you cannot claim this deduction under Section 80EEA.
FAQs
Can I claim Section 80EEA if I already own a house?
No, only first-time homebuyers can claim this deduction.
Is there any income limit for claiming this deduction?
No, there is no income limit under Section 80EEA.
Can I claim this benefit for a jointly owned property?
Yes, but only if both co-applicants are first-time homebuyers and meet the eligibility criteria.
What if I took a loan from a relative or private lender?
You cannot claim Section 80EEA benefits if your loan is not from a recognized financial institution.
Is Section 80EEA available for under-construction properties?
Yes, but deductions can be claimed only after possession of the property.
