Thursday, December 30, 2021

Income Tax Deduction under Section 80EEA on Home Loan

Filing income tax return requires a lot of considerations while assessing income and deductions for the financial year. As per the Income Tax Act 1961, many deductions are allowed for different purposes under different sections of the Act. For home buyers, deductions under different sections such 24, 80C, 80EE and 80EEA are allowed. This article discusses various aspects of deduction available under section 80EEA.

Under Section 80EEA of the Income Tax Act 1961, the taxpayers can claim deduction up to Rs. 1,50,000 from their taxable income on the payment of interest component of the home loan above the limit of Rs. 2,00,000 available under Section 24 Income Tax Act 1961.

Eligibility Criteria

  • The deduction under this section is available only to individuals. If a property is owned by a HUF, AOP, a company or any other kind of taxpayer, deduction under this section is not allowed.
  • Under this section of the Income Tax Act 1961, an amount up to Rs 1,50,000 is eligible for deduction. This amount is over and above the Rs 2 lakh limit under Section 24 of the Income Tax Act. 
  • To claim this deduction, the taxpayers shouldn't own any property on the date of sanction of a loan from a financial institution. 
  • The value of the house should be Rs 45 lakh or less. 
  • The loan must be sanctioned by a financial institution or a housing finance company.
  • The taxpayers can claim tax deduction either under section 80EE or 80EEA. That means, taxpayers cannot claim under both the sections 80EE and 80EEA at the same time.

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