What is Section 80EEA of Income Tax Act?

Section 80EEA of the Income Tax Act focuses on tax deductions against interest payment on home loans. In 2014, when Narendra Modi was elected as the Prime Minister, he launched a flagship program–Housing for All by 2022. Modi also introduced the Pradhan Mantri Awas Yojana to accomplish this goal. So, Section 80EEA is a way of encouraging people to buy homes through subsidies offered by the centre.

Section 80EEA Deduction Amount

Section 80EEA deduction is capped at ₹1,50,000. This income tax deduction is over and above the Section 24(b) deduction of up to ₹2 lakh on home loan interests. To put it simply, as an assessee, you can claim up to ₹3.5 lakh against interest on a home loan, provided you meet certain conditions.

Section 80EEA Eligibility Criteria

Section 80EEA caters to first-time homebuyers only. This means, as an individual, you shouldn’t own any residential property when you are granted a home loan. This deduction is available for individuals, whereas, HUFs, AOPs, BOIs, partnership firms, or any other type of taxpayer cannot utilise Section 80EEA deduction.

Who is a First-Time Homebuyer Under Section 80EEA?

You are a first-time home buyer if you do not own any residential property in your name while applying for a home loan. A working adult (even if single) is deemed a separate household for tax calculation purposes. Thus, even if your parents own properties, you can be a first-time homebuyer.

What are the Conditions to Claim Section 80EEA Deduction?

Let’s understand the conditions for claiming the Section 80EEA deduction:

 

  • To purchase a residential property, the housing loan must be obtained from a housing finance company or a financial institution.

  • The loan must be sanctioned between April 1, 2019, and March 31, 2022.

  • The stamp duty value of the residential property should not exceed ₹45 lakh.

  • The individual shouldn’t be eligible for income tax deduction under Section 80EE.

  • The individual should be a first-time homebuyer.

     

Conditions w.r.t. the carpet area of the house property (these conditions are not mentioned under Section 80EEA but in the memorandum to the finance bill):

 

  • The carpet area of the house purchased in metropolitan cities like Bengaluru, Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata, and Mumbai (the whole of Mumbai Metropolitan Region) should not exceed 645 sq. ft.

  • The carpet area of the house in other cities or towns shouldn’t be more than 968 sq. ft.

80EEA Vs 80EE

Check out the below table to understand the difference between 80EE and 80EEA:

Particulars

Section 80EE

Section 80EEA

Property Value Limit

₹50 lakh

₹45 lakh

Loan Period Covered

April 1, 2016 to March 31, 2017

April 1, 2019 to March 31, 2022

Loan Amount

Up to ₹35 lakh

Not specified

Lock-In Period

None

None

Maximum Rebate

₹50,000

₹1.5 lakh

Now that you know the Section 80EEA and 80EE difference, you can identify which one of the two applies to you.

Section 80EEA Vs Section 24

Let’s explore the difference between Section 80EEA and Section 24(b) of the Income Tax Act.

Particulars

Section 80EEA

Section 24(b)

Possession

Not Required

Required

Deduction Limit

1.5 lakh

2 lakh or the entire interest

Loan Period

Loans received between April 1, 2019, and March 31, 2022

Loans obtained after April 1, 1999

Loan Source

Banks only

Banks or personal sources

Property Value

45 lakh

Not specified

 Lock-In Period

None

None 

 Buyer Category

 

Individuals who are first-time homebuyers

 

All homebuyers

Though the 80EEA deduction is available for home loans sanctioned between April 1, 2019, and March 31, 2022, you can claim a rebate until full loan repayment. According to PMAY, a single earning member of the family is deemed a separate household. So, if you are an unmarried individual who is financially independent as well as a first-time homebuyer, you can claim Section 80EEA deduction against the home loan interest.

FAQs on Section 80EEA

  • ✔️Can I claim both Section 80EE and 80EEA?

    No. If you are eligible for Section 80EE, you cannot claim deductions under Section 80EEA.

  • ✔️How to claim 80EEA?

    To claim deduction under Section 80EEA, first, calculate the total home loan interest portion for the year and claim a deduction of up to ₹2 lakh under Section 24(b). In case the limit is exhausted, you can claim a deduction under 80EEA up to ₹1.5 lakh for the remaining interest portion.

  • ✔️What is 80EEA in Income Tax?

    Section 80EEA of the Income Tax Act enables first-time homebuyers to claim deductions up to ₹1,50,000.

  • ✔️What is the Section 80EEA limit?

    The Section 80EEA limit is ₹1.5 lakh.

  • ✔️Who can claim deduction under Section 80EEA?

    An individual who is a first-time homebuyer can claim deduction under Section 80EEA.

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