The Government's new approach, "Housing For All," in which the government's main objective is to provide homes for lower and middle-income groups of the society, has now extended the total interest deduction allowed for lower-cost housing loans taken within the period between 1 April 2016 and 31 March 2017. In addition, Section 80EE of the Income Tax Act enables income tax benefits on the residential house loan taken from any financial institution. As per this section, a person can get tax exemptions up to Rs 50,000 every financial year and continue to claim this benefit until the loan amount is repaid fully.

Eligibility Criteria Required

Section 80EE allows a deduction to only the individuals, which means a company, a HUF, AOP, or any other taxpayer can not be benefited under this section and can not claim it.

The Total Amount Limit

The 80EE Deduction is up to Rs 50,000 PA. But if it is more than the aforesaid amount and below the Rs 2 lakh limit one can claim a deduction under Section 24 of the Income Tax Act.

General Conditions

To claim this particular benefit or Deduction, a person must not own any other house, property, or land on the date of the loan sanction from any financial institution.

Essential Factors Of Section 80EE of the Income Tax Act

Section 80 EE offers many benefits, but to avail of them, you need to know some facts about them. Read on to learn more.

  • This 80 EE Income Tax deduction will only be provided if the property or home cost is not more than Rs. 50 Lakhs and the total amount of the loan is up to Rs. 35 Lakhs.
  • The loan needs to be sanctioned between 1 April 2016 and 31 March 2017.
  • You can only avail the deduction benefit as long as the loan payment continues.
  • The 80EE Income Tax deduction will only be considered between the financial year 2016 to 2017 or onwards.

Conditions That Must Be Met For 80EE Deduction

Here we have summarized the required conditions

  • The taxpayer must not own any residential property on the date of loan sanction
  • The section 80EE provides deduction benefits on the interest portion of a home loan
  • The total loan amount must be below 35 lakh
  • A registered financial institution or finance organization must approve the home loan
  • The total economic value of the house or property must not be more than 50 lakhs 
  • In the case of commercial or industrial property, one can not avail of the tax benefit
  • To claim the deductions under this section 80EE, the loan must have been sanctioned between 01.04.16 to 31.03.17.

Who Can Claim The Benefit?

  • It can be claimed by Individual Taxpayers. More importantly, homebuyers can use the deduction whether they are a couple or single. Both spouses are eligible for this deduction with shared ownership and monthly loan payments.
  • First-time home buyers are only eligible to claim the benefits under section 80EE
  • The person must receive the loan from a registered financial institution.

The Tax Benefit Is Not Available To

  1. Hindu Undivided Families (HUF),
  2. Association of Persons (AOP),
  3. Companies,
  4. Trusts

How To Claim The Benefit?

  • Evaluate the total interest amount payable during a financial year on the home loan.
  • Once the total interest component paid is detected, claim the Deduction up to Rs. 2,00,000 (under Section 24(b) of the Income Tax Act, 1961).
  • The excess amount, up to Rs. 50,000, can be claimed under Section 80EE of the Income Tax Act, 1961.

The Conclusion

The above article has given a comprehensive guide about Section 80EE of the Income Tax Act. It covers all the necessary details like benefits, application procedure, claim benefit and also the eligibility criteria. Hope this will guide you and help you answer all your queries. For future details, you can consult an expert’s team!