What is Section 80EE?
Section 80EE of the Income Tax Act, 1961 provides tax deduction benefit on the interest paid on home loan taken by a first time home buyer. Such a buyer can claim tax deduction upto Rs.50,000 under section 80EE. It should be noted that the available tax deduction limit under section 80EE is over and above of what has been provided under section 80C and Section 24 of the IT Act, 1961.
Section 80EE: Eligibility Criteria
- Individual taxpayers who have bought a house for the first time and taken a home loan can claim the tax deduction benefit under section 80EE.
- The value of the house should be Rs.50 lakh or less.
- The home loan availed should be Rs.35 lakh or less.
- The deduction limit is upto Rs. 50,000 per annum and only available on the interest paid for the home loan.
- The loan should be sanctioned by a recognised financial institution and disbursed during the period between April 2016 to March 2017.
Section 80EE: Key Features
- Under section 80EE, additional tax deduction claim upto Rs. 50,000 can be made. This is exclusive of the deduction limit upto Rs. 1.5 lakh available under Section 80C and upto Rs. 2 lakhs available under Section 24 of the IT Act, 1961.
- The tax benefit can only be claimed by an individual taxpayer. Entities such HUF (hindu undivided family), AOP (association of persons), etc. are not eligible for tax benefits offered under section 80EE. However, the deduction can be claimed if the property is bought jointly (by 2 or more individuals).
- In case of joint holding with spouse, the tax benefit can be proportionately claimed by both.
It is not necessary for the borrower to reside in the property for which the tax deduction has been claimed. One can avail the benefit on the property purchased while living in rented accommodation. However, this benefit can be claimed only after possession of the home has been completed.
- It should be noted that tax benefit under section 80EE can only be availed after the home loan interest payment benefit under section 24 has been exhausted. So if you have claimed tax deduction upto Rs. 2 lakhs under section 24 only then can you claim an additional tax deduction of up to Rs. 50,000 under section 80EE.
Also Read: Section 24 of Income Tax Act, 1961