Section 80EE: Tax Deduction for Interest on Home Loan

When any financial institution avails loan on residential house property, they are obliged to pay interest over the same amount. Section 80EE of income tax act allows income tax benefits on the interest portion for the same property. Under this section, you can claim a housing loan interest deduction of up to Rs. 50,000 per financial year.till the time you pay the loan amount entirely. 

What is Section 80EE Deduction?

Section 80EE of Income Tax Act provides tax benefits specifically for first-time homebuyers in India. It allows individuals to claim housing loan interest deduction, with the following key features:

• Taxpayers can claim a deduction of up to ₹50,000 per financial year on the interest portion of the home loan, in addition to the ₹2 lakh limit available under Section 24 for interest on home loans.
• The housing loan interest deduction is available only to individual taxpayers (not applicable to Hindu Undivided Families, companies, or other entities). The home loan must have been sanctioned between April 1, 2016, and March 31, 2017. The taxpayer must not own any other residential property at the time the loan is sanctioned.
• The stamp duty value of the property should not exceed ₹50 lakhs, and the loan amount should be up to ₹35 lakhs.
• The housing loan interest deduction can be claimed until the loan is fully repaid, provided the taxpayer continues to meet the eligibility criteria.
• To claim this housing loan interest deduction, individuals must ensure that they have not opted for the new tax regime, as the benefits under Section 80EE are not available under that regime

Conditions Required for Deduction Under Section 80EE Deduction 

Following are the basic conditions and eligibility criteria one should be aware of before applying for housing loan interest deduction under Section 80EE deduction.

• It allows deduction up till Rs. 50,000 per financial year on the interest paid for home loan.
• It is only valid if the home loan was sanctioned between April , 2016 to 31st March, 2017.
• The total loan amount should not be more than 35 Lakhs.
• The value of property should not be more than 50 Lakhs.
•  On the date of loan sanctioning, the taxpayer shall not have more than one property owned under his name.
• The deduction is only available on the old tax regime.
• You can claim the deduction until the loan amount is entirely paid.
• Under section 24, additional deduction of Rs. 2,00,000 is available for interest on home loan.

How to Claim Tax Deduction Under Section 80EE?

Let us understand what do you need to do to claim section 80EE deduction

• Check the eligibility criteria before applying for the housing loan interest deduction. Apply only if you tick all the conditions that are applicable.
• Calculate the total amount of interest you are going to pay on a home loan during one financial year.

• If you satisfy the conditions of section 24, first claim the deduction of Rs. 2,00,000 under the Section 24 on the interest. The remaining, up to Rs. 50,000 will be deducted under section 80EE
• Submit the documents required while filing the income tax return if you are self employed. If not, Provide your employer with the home loan interest certificate from the lender.
• Claim housing loan interest deduction under section 80EE until the total amount of home loan is paid.

Difference Between Section 80EE and Section 80EEA  

Relation b/w Section 80EE and Section 24

“Deductions from income from house property” is an Income Tax act that deals with the interest an individual pays on any home or property loans undertaken.

Now, if you satisfy the conditions of both Section 80EE and Section 24 of the Income Tax Act;

• Exhaust the deduction limit under Section 24 first i.e, Rs. 2 Lakh
• Later, move forward with the claims under Section 80EE deduction limit.