Difference Between Sections 80EE and 80EEA

Section 80EE and Section 80EEA of the Income Tax Act, 1961 allow first-time homebuyers to claim deductions from their net taxable income. A maximum deduction of ₹50,000 and ₹1,50,000 can be claimed under Section 80EE and Section 80 EEA respectively on the interest portion of the home loan EMIs. 

This deduction is over and above the deduction claimed on the interest amount under Section 24(b) of the Income Tax Act. However, it is worth noting that you can claim a deduction only under one of Section 80EE and Section 80 EEA depending upon when your home loan was sanctioned.

You may refer to the table below for a quick comparison between Section 80EE and Section 80 EEA:

If you get a home loan for your first house purchase in FY 2016-17, you are eligible to claim a tax benefit of up to ₹50,000. This amount is deductible from your net taxable income under Section 80EE of the Income Tax Act, 1961. This deduction is over and above the deductions claimed under Section 24(b) and Section 80(c).

• Only first-time homebuyers can claim income tax deduction under Section 80EE
  

• The value of the property must not exceed ₹50 Lakhs
  

• The home loan amount must be less than ₹35 Lakhs
  

• You can claim the deduction only on the interest portion of the loan EMIs under Section 80EE
  

• The deduction can not be claimed on loans taken for commercial property
  

• The home loan must have been sanctioned in FY 2016-17

• Only individual borrowers are eligible for claiming deduction under Section 80EE on property purchased either singularly or jointly
  

• Association of Persons (AOP), Hindu Unified Families (HUF), trusts, companies, etc. can not claim income tax deductions under Section 80EE
  

• The taxpayer need not reside in the property in order to be eligible for the deduction

To claim the Section 80EE deduction, follow these steps during your income tax filing process:

• Gather Required Documents: Collect your loan sanction letter, interest certificate from your lender, and loan repayment schedule. These documents will be necessary for accurate reporting and verification, if required.

• Report Interest Paid Under Section 80EE: While filing your return, under the Deductions section, report the home loan interest eligible for deduction. Ensure that this amount is separate from the interest reported under Section 24(b).

• Adhere to the Deduction Limit: Section 80EE allows an additional deduction of up to ₹50,000 annually on home loan interest. This is over and above the ₹2 lakh limit under Section 24(b). Keep track of the total interest paid to utilise this benefit effectively.

• Verify Eligibility Based on Loan Sanction Year: Ensure your home loan was sanctioned before March 31, 2017. This is crucial as loans sanctioned outside this period do not qualify for Section 80EE benefits.

• Use Accurate Filing Tools: Whether filing manually or through an online platform, ensure your data is entered correctly. Many e-filing platforms offer tools to calculate deductions automatically based on your interest payments, simplifying the process.

• Review the Data: Cross-check the information, especially the deduction claimed under Section 80EE, to ensure there are no errors. Any discrepancies can lead to notices or adjustments in your tax assessment.

Double-check that the home loan interest deduction under Section 80EE is in addition to what you claim under Section 24(b). Keep your documents safely for future reference, especially in case of scrutiny or audits by the Income Tax Department.

Section 80EEA replaced Section 80EE in FY 2019-20. Under this, those who purchased their first residential property in FY 2019-20, FY 2020-21, or FY 2021-22 can claim a deduction of up to ₹1,50,000 from their net taxable income. Just like Section 80EE, the deduction under Section 80 EEA also can be claimed only on the interest portion of the loan EMIs.

• Only first-time homebuyers are eligible to claim income tax deduction under Section 80 EEA
  

• A maximum deduction of ₹1.5 Lakhs can be claimed from the net taxable income under Section 80 EEA
  

• The carpet area of the property must not exceed 60 square metres (645 sq ft) if the property is located in any of the following metro cities- Mumbai, Hyderabad, Bangalore, Kolkata, Chennai and Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad)
  

• The carpet area must not exceed 90 square metres (968 sq ft) for properties located in any other town/city in the country
  

• The stamp duty applicable on the property must be ₹45 Lakhs or less
  

• The home loan must have been taken in FY 2019-20, FY 2020-21, or FY 2021-22

• Only individual borrowers can claim a deduction under Section 80EEA on property purchased either singly or jointly
  

• Association of Persons (AOP), Hindu Unified Families (HUF), trusts, companies, etc. can not claim income tax deductions under Section 80EEA
  

• Just as in Section 80EE, the taxpayer need not reside in the property in order to be eligible for the deduction under Section 80 EEA

To claim the Section 80EEA deduction, you’ll need to follow these steps during your income tax filing:

• Maintain Proper Documentation: Ensure you have your loan sanction letter, interest certificate from the lender, and property registration documents. These will be necessary for validation, if required.
  

• Report Interest Paid: During the filing process, under the Deductions section, declare the amount of interest paid on your home loan that qualifies under Section 80EEA. This should be supported by your lender’s interest certificate.
  

• Check the Deduction Limit: The maximum deduction you can claim under Section 80EEA is ₹1.5 Lakhs. Ensure that this amount is reported accurately to avoid discrepancies.
  

• Combine with Section 24(b): If your total interest on a home loan exceeds ₹2 lakh (claimed under Section 24(b)), the additional ₹1.5 lakh under Section 80EEA can be claimed. This requires meticulous reporting to ensure you benefit fully from both deductions.
  
  

Ensure the loan details match what your lender reports to avoid mismatches during scrutiny. Keep all documents and certificates handy for at least seven years, as they might be required in case of an audit. Double-check the interest split between Section 24(b) and Section 80EEA to avoid exceeding the permissible limit.

No, an individual cannot claim deductions under both Section 80EE and Section 80EEA simultaneously. Both sections are designed to provide additional tax benefits on home loan interest for first-time homebuyers, but they apply to different periods and have distinct eligibility criteria. If you have claimed a deduction under Section 80EE, you are not eligible to claim any benefit under Section 80EEA and vice versa. It's essential to assess which section you qualify for, based on your loan sanction date and other loan details, to maximise your tax benefits.

Here are some important terms that you should be aware of when filing your ITR u/s 80EE and 80EEA:

• Carpet Area: The actual usable floor area within a property, excluding external and common walls
  

• Stamp Duty Value: The government-assessed value of a property for tax purposes, used to calculate stamp duty
  

• LTV Ratio: The percentage of a property’s value that a lender can finance through a loan
  

• Annual Value: The potential income from a property if it is rented out, used for tax calculation. This is as assessed by the government.
  

• Gross Total Income: The sum of all income earned by an individual before applying for deductions under the Income Tax Act, 1961