Deduction in respect of interest on loan taken for affordable housing Section 80EEA

Deduction in respect of interest on loan taken for affordable housing Section 80EEA

New section 80EEA provides for deduction up to ₹1.5 Lakhs in a year in respect of interest on loan taken for purchase of affordable residential house property from any financial institution to an assessee being an individual, subject to the following conditions –

Loan has been sanctioned during the period between 01-Apr-2019 to 31-Mar-2020.

Stamp duty valuation of the said property does not exceed ₹45 lakhs.

On the date of sanction, the assessee does not own any other residential house property.

No deduction shall be allowed for the interest claimed under this section; under any other provisions of the Act for the same or any other assessment year.

Deduction in respect of interest on loan taken for affordable housing Section 80EEA

Points to be noted :-

The deduction under this section is available only to individuals. This deduction is not available to any other taxpayer.

Housing loan must be taken from a financial institution or a housing finance company for buying a residential house property.

The individual taxpayer should not be eligible to claim deduction under the existing Section 80EE.

The taxpayer should have bought the house property for the first time. The taxpayer should not own any residential house property as on the date of sanction of the loan.

The carpet area of the house property has been specified in the Finance Bill.

(i) Carpet area of the house property should not exceed 60 square meter (645 sqft) 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).

(ii) Carpet area should not exceed 90 square meter (968 sqft) in any other cities or towns.

(iii) Further, this definition will be effective for affordable real estate projects approved on or after 1 September 2019.

Both Resident and Non-Resident Indians can claim this deduction.

The section also does not specify if the residential house should be self-occupied to claim the deduction. So, borrowers living in rented houses can also claim this deduction.

The deduction can only be claimed by individuals for the house purchases jointly or singly. If a person jointly owns the house with spouse and they both are paying the installments of the loan, then both of them can claim this deduction, subject to the conditions specified in the section.

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