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Section 80EE and Section 80EEA of the Income Tax Act, 1961, allow first-time homebuyers to claim tax deductions on home loan interest from their net taxable income. However, the two sections differ in terms of the loan sanction period, deduction limits, and property value or loan amount conditions. Taxpayers cannot claim deductions under both sections simultaneously.
A maximum deduction of ₹50,000 and ₹1,50,000 can be claimed under Section 80EE and Section 80EEA 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 80EEA depending upon when your home loan was sanctioned.
You may refer to the table below to understand the difference between Section 80EE and Section 80EEA:
Particulars |
Section 80EE |
Section 80 EEA |
|---|---|---|
Purpose |
Section 80EE aims to provide tax benefits to first-time homebuyers for interest paid on home loans. It encourages home ownership among middle-income individuals. |
Section 80EEA focuses on extending tax benefits for interest paid on home loans specifically for affordable housing. It targets a broader group, including individuals purchasing homes under government schemes, promoting housing for all. |
Max Deduction Allowed |
₹50,000 (only on the interest portion of the loan EMIs) |
₹1,50,000 (only on the interest portion of the loan EMIs) |
Applicability |
Home loans taken between April 1, 2016 to March 31, 2017 |
Home loans taken between April 1, 2019 to March 31, 2022 |
Eligibility |
First-time individual home buyers |
First-time individual home buyers |
Property Value |
The stamp duty value of the residential property must not exceed ₹50 Lakhs |
The stamp duty value of the residential property must not exceed ₹45 Lakhs |
Maximum Loan Amount |
The loan amount must not exceed ₹35 Lakhs |
The section does not specify an explicit loan amount limit, but the amount must remain within the permissible property value limit |
Simultaneous Claim |
You cannot claim a deduction under Section 80EEA if you are already claiming it under Section 80EE |
Only individuals who do not own any other residential property at the time of loan sanction are eligible. |
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 80EEA also can be claimed only on the interest portion of the loan EMIs.
A maximum deduction of ₹1.5 Lakhs can be claimed from the net taxable income under Section 80EEA
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 80EEA
To claim the Section 80EEA deduction, you’ll need to follow these steps during your income tax filing:
Ensure you have your loan sanction letter, interest certificate from the lender, and property registration documents. These will be necessary for validation, if required.
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.
The maximum deduction you can claim under Section 80EEA is ₹1.5 Lakhs. Ensure that this amount is reported accurately to avoid discrepancies.
If your total interest on a home loan exceeds ₹2 Lakhs (claimed under Section 24(b)), the additional ₹1.5 Lakhs 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.
Section 80EE and Section 80EEA offer additional tax benefits on home loan interest payments, but they work alongside other provisions like Section 24(b) and Section 80C.
Here's a breakdown:
This section allows you to claim a deduction of up to ₹2 Lakhs on the interest paid on home loans. It applies regardless of whether you are a first-time homebuyer or not. The deduction under Section 24(b) is available in addition to the deductions under Sections 80EE and 80EEA.
Provides an additional deduction of up to ₹50,000 on home loan interest for first-time homebuyers, over and above the ₹2 Lakhs allowed under Section 24(b). This benefit is available for loans sanctioned in the specified financial years and meeting the property and loan value criteria.
Offers a higher deduction of up to ₹1.5 Lakhs for first-time homebuyers purchasing affordable housing. Like Section 80EE, this deduction is available over and above the ₹2 Lakhs benefit under Section 24(b). The property must meet the ₹45 Lakhs stamp duty value cap, and the loan must have been sanctioned between April 1, 2019, and March 31, 2022.
While Section 80C applies to principal repayments and other investments like PPF, LIC premiums, and EPF, it does not cover interest-related deductions. The limit under Section 80C is ₹1.5 Lakhs and is separate from the interest deductions available under Section 24(b), 80EE, and 80EEA.
In summary, you can claim the deduction under Section 24(b), Section 80EE, and Section 80EEA, but not both Section 80EE and 80EEA together in the same year.
Here are examples to illustrate how you can claim deductions under Sections 80EE, 80EEA, and 24(b) in different scenarios:
Loan Sanctioned: ₹30 Lakhs for the purchase of a property in FY 2016-17
Interest Paid: ₹2,20,000 in the year
Claim:
You can claim a ₹2 Lakhs deduction under Section 24(b) for the interest paid on the loan
Additionally, under Section 80EE, you can claim a further ₹50,000 for home loan interest
Total Deduction: ₹2,50,000
Loan Sanctioned: ₹40 Lakhs for an affordable home purchase in FY 2020-21
Interest Paid: ₹2,50,000 in the year
Claim:
You can claim ₹2 Lakhs under Section 24(b) for the interest paid on the loan
Additionally, under Section 80EEA, you can claim ₹1.5 Lakhs for home loan interest, as the property value does not exceed ₹45 Lakhs
Total Deduction: ₹3.5 Lakhs
If you claim deductions under both Section 80EE and Section 80EEA for the same loan, it will not be accepted. You must choose one based on your loan sanction year and property value.
Here are some common mistakes to avoid while claiming deductions under Sections 80EE and 80EEA:
These sections are mutually exclusive, and claiming both in the same year for the same home loan is not allowed. Ensure you select the correct section based on your home loan sanction date and eligibility.
For Section 80EE, ensure the loan was sanctioned between April 1, 2016, and March 31, 2017, and the loan amount is ₹35 Lakhs or less.
For Section 80EEA, the home loan must be for affordable housing, and the stamp duty value of the property must not exceed ₹45 Lakhs.
Double-check the loan amount and property value limits. If the loan amount exceeds ₹35 Lakhs (for 80EE) or the property value exceeds ₹45 Lakhs (for 80EEA), you may not be eligible for these deductions.
Ensure that all supporting documents like loan sanction letters, interest certificates, and property registration papers are in place. Missing or incorrect documentation can delay the claim process or result in rejections.
Don’t forget to account for Section 24(b) when calculating your total deductions, as it provides a ₹2 Lakhs deduction for home loan interest.
To claim deductions under Sections 80EE and 80EEA, ensure you have the following documents ready:
This is required to confirm the loan amount, sanction date, and property details
This certificate provides the details of the interest paid on the home loan during the financial year
This helps in calculating the principal and interest portions of your home loan repayment
These documents are essential to validate the ownership and value of the property
Ensure you have supporting documentation showing that you are a first-time homebuyer, as this is crucial for eligibility.
Since Section 80EEA has a cap on the stamp duty value of ₹45 Lakhs, ensure you have the relevant proof
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.
When deciding between Section 80EE and Section 80EEA, the most beneficial option depends on your specific situation, including the home loan amount, property value, and loan sanction date.
Here's a breakdown to help you decide:
Maximum Deduction
₹50,000 on home loan interest.
Eligibility
Available to first-time homebuyers who took a home loan between April 1, 2016, and March 31, 2017.
Property Limit
The value of the property must not exceed ₹50 Lakhs.
Loan Limit
The home loan amount should not exceed ₹35 Lakhs.
Benefits
If your property is within the ₹50 Lakhs value limit, and your home loan is within ₹35 Lakhs, this section provides a decent benefit. Especially, when added on top of the ₹2 Lakhs deduction under Section 24(b).
Maximum Deduction
₹1.5 Lakhs on home loan interest.
Eligibility
Available to first-time homebuyers who took a home loan between April 1, 2019, and March 31, 2022.
Property Limit
The stamp duty value of the property must not exceed ₹45 Lakhs.
Loan Limit
No specific loan limit (unlike Section 80EE).
Benefits
If you qualify for Section 80EEA, you can claim a significantly higher deduction (₹1.5 Lakhs) compared to Section 80EE, making it a more beneficial option, particularly for affordable housing. It is especially useful if you’ve purchased a home under government schemes or if the property is located in areas with lower property prices.
If you are purchasing an affordable property (value under ₹45 Lakhs) and your loan was sanctioned between 2019 and 2022, Section 80EEA is the more beneficial choice. This is because it offers a larger deduction of ₹1.5 Lakhs.
On the other hand, if your property and loan do not meet the eligibility criteria for Section 80EEA (for example, if your property exceeds ₹45 Lakhs or if your loan was sanctioned before 2019), Section 80EE can still provide an additional ₹50,000 in 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.
In short, Section 80EE and Section 80EEA both offer valuable tax benefits for first-time homebuyers, but Section 80EEA is generally more beneficial. It provides a higher deduction of ₹1.5 Lakhs for affordable housing loans, while Section 80EE offers ₹50,000 for home loans sanctioned earlier. Both deductions apply over and above the ₹2 Lakhs allowed under Section 24(b) for home loan interest.
Choosing between the two depends on when your loan was sanctioned and the property’s value. Ensure you meet the eligibility criteria to maximise your tax savings.
Yes, you can claim a deduction of up to ₹1.5 Lakhs every year under Section 80EEA on the interest portion of your home loan EMIs.
Yes, Section 80EEA applies to under-construction properties as long as the loan is sanctioned within the specified financial years and other eligibility conditions, including the property’s value.
Yes, if you initially claimed Section 80EE and later meet the eligibility criteria for Section 80EEA (such as purchasing affordable housing after 2019), you can switch to claiming the higher deduction under Section 80EEA.
Yes, self-employed individuals are eligible to claim deductions under both Section 80EE and Section 80EEA as long as they meet the same eligibility criteria as salaried individuals, including the home loan amount, property value, and loan sanction dates.
No, the new tax regime does not allow tax deductions under Section 80EE or Section 80EEA. These deductions are available only under the old tax regime, which allows for exemptions and deductions.
No, deductions under Section 80EE and Section 80EEA can only be claimed for self-occupied properties. If the property is rented out, these deductions do not apply.
No, both Section 80EE and Section 80EEA are available only for residential properties. You cannot claim these deductions for commercial properties.
Section 80EEA allows first-time homebuyers to claim a deduction of up to ₹1.5 Lakhs on home loan interest for affordable housing. The property must meet the ₹45 Lakhs stamp duty value cap, and the loan must be taken between April 1, 2019, and March 31, 2022.
Section 80EE allows first-time homebuyers to claim an additional deduction of up to ₹50,000 on home loan interest. The loan must be sanctioned between April 1, 2016, and March 31, 2017, with the property value not exceeding ₹50 Lakhs and the loan amount not exceeding ₹35 Lakhs.
The maximum deduction under Section 80EEA is ₹1.5 Lakhs on home loan interest paid during the financial year, in addition to the ₹2 Lakhs deduction available under Section 24(b).
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