Introduction:
Section-80EE of the Income Tax Act, 1961 prescribes for deduction towards interest on loan taken for residential house property. Section-80EE was introduced initially in Financial Year 2013-14 and benefit of the same was limited only for F.Y. 2013-14 & 2014-15. Section-80EE was re-introduced from F.Y. 2016-17 (effective from Assessment Year 2017-18).
Who is eligible to claim deduction under section-80EE??
- Only an individual assessee can claim deduction under section-80EE.
- Such individual may be resident as well as non-resident assessee.
- Other assessee whether HUF, Company, LLP, AOP, Parrtnership Firm or LLP can not claim deduction under section-80EE.
What is the amount of deduction under section-80EE??
- Deduction allowed under section-80EE is: Interest payable on loan or Rs. 50,000, whichever is less.
- Deduction under section-80EE is over and above the deduction of Rs. 2,00,000 allowable under section-24 of the Income Tax Act, 1961. Therefore, if interest element of loan exceeds Rs. 2 Lakhs, you should claim deduction for excess interest under this section.
- However, same amount of interest is not deductible twice under section-24 and section-80EE.
What are the conditions for claiming deduction under section-80EE??
- The assessee is an individual who has taken a loan for acquisition of a residential house property.
- Such loan is taken from a bank or a housing finance company.
- Loan should have been sanctioned by bank/housing finance company during April 1, 2016 and March 31, 2017.
- The amount of loan sanctioned should not be more than Rs. 35 Lakhs.
- The value of residential house property should not be more than Rs. 50 Lakhs.
- The assessee does not own any residential house property on the date of sanction of loan.
Other points
- Section-80EE does not specify that the residential house property should be self-occupied for claiming deduction. You can claim deduction under this section even if you are living in a rented house. Only condition is that you must not own any residential house property on date of sanction of loan.
- Deduction under section-80EE is available person-wise and not property-wise. If a person jointly buys a house property with his/her spouse and both are paying the installments of loan, then both can claim deduction up to Rs. 50,000 each.
