80EEA : Additional deduction of interest payment in respect of home loan

What is section 80EEA of income tax?

Section 80EEA covers additional deduction of interest payment on home loan subject to certain conditions. The maximum tax deduction available under this section is Rs. 1,50,000/- over and above deduction available under section 24.This deduction is available from financial year 2019-20.

What is the amount of deduction available u/s 80EEA ?

The amount of deduction available under this section shall be calculated in the following manner :

Actual Interest payment or
Rs. 1,50,000/-
(whichever is lower)

This deduction is available over & above exemption u/s 24 provided other conditions satisfied.

Example : A has taken a home loan during FY 2019-20. The stamp duty value of the house is Rs. 50 lakh. Total interest payment made during the year is Rs. 2,55,000/-. Whether A is eligible to claim deduction under section 80EEA ?

In the above example, stamp duty value of the house exceeds Rs. 45 lakh hence A is not eligible to claim deduction under section 80EEA.

However, A can claim exemption of interest u/s 24 of Rs. 2,00,000/-

Example : A has taken home loan. Given below are the information :

Now, we will discuss what are the other sections under which deduction of interest payment on home loan is available :

Section 24: Under this section, exemption of interest payment on home loan maximum upto Rs. 2,00,000 under house property income is available subject to certain conditions.

Section 80EE: Deduction on the interest of a home loan under this section is available. The maximum deduction available as per this section is Rs. 50,000/- subject to certain conditions:

• Value of house should be up to Rs. 50 lakh
• Loan amount should not exceed Rs. 35 lakh
• Loan must be sanctioned between 01-April-2016 to 31-March-2017

Who is eligible to claim deduction u/s 80EEA ?

Deduction under section 80EEA is not available to HUF, AOP, BOI, Partnership firm or any other taxpayer except Individual assessee.

What are the conditions to claim deduction u/s 80EEA ?

Deduction u/s 80EEA is available subject to given below conditions :

• The stamp duty value of residential houses shall be upto Rs. 45 lakh.
• The loan is taken from a financial Institution*.
• The loan has been sanctioned between 01-04-2019 to 31-03-2020.
• Assessee is not claiming any deduction under section 80EE.
• The assessee owns no residential house property on the date of sanction of loan.

Apart from all above conditions, there is one additional condition related to carpet area which is not given under section 80EEA but given in memorandum to the finance bill :

Carpet areas should not exceed 60 square meter in metropolitan cities (Bengaluru, Chennai, Delhi, Noida, 12 Greater Noida, Ghaziabad, Gurgaon, Faridabad,Hyderabad, Kolkata and whole of Mumbai Metropolitan Region or 90 square meter in cities or towns other than metropolitan cities.

What is the difference between Section 80EEA & Section 24 ?

What is the difference between Section 80EEA & Section 80EE ?

Meaning of important terms u/s 80EEA

• A banking company to which the Banking Regulation Act applies, or
• Any bank or banking institution referred to in section 51 of that Act or
• A housing finance company

Value adopted or assessed or assessable by

• any authority of the Central Government or
• a State Government

for the purpose of payment of stamp duty in respect of immovable property.

Value adopted or assessed or assessable by

• any authority of the Central Government or
• a State Government

for the purpose of payment of stamp duty in respect of immovable property.