Section 80EEA is inserted in Budget 2019 for governments motive of “Housing for All”. As per
this section 1st time home buyers can claim extra deduction of housing loan taken during the period between 1st April 2019 to 31st March 2020 of Rs.150000 with following conditions:
Conditions:
- ONLY FOR INDIVIDUALS (This deduction is not available to any other taxpayer. i.e HUF, AOP, Partnership firm, a company, or any other kind of taxpayer cannot claim any benefit under this section)
- LOAN SHOULD BE TAKEN BETWEEN 1 APRIL 2019 TO 31 MARCH 2020
- Interest is payable on loan taken from any financial institution for the purpose of acquisition of a residential house property
- STAM DUTY VALUE OF THE HOUSE PROPERTY SHOULD NOT EXCEED RS.45 LAKHS
- THE ASSESS SHOULD NOT OWN ANY RESIDENTIAL HOUSE PROPERTY ON THE DATE OF SANCTION OF LOAN I.E 1st TIME BUYER
- MAXIMUM AMOUNT OF DEDUCTION IS RS.150000 FOR AY 2020-21 AND SUBSEQUENT YEARS (This deduction is over and above the deduction of Rs 2 lakh for interest payments available under Section 24 of the Income Tax Act.Therefore, taxpayers can claim a total deduction of Rs 3.5L for interest on home loan, if they meet the conditions of section 80EEA)
- Carpet area of the house property should not exceed 60 square meter ( 645sq ft) in metropolitan cities of Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater
Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of
Mumbai Metropolitan Region)
- Carpet area should not exceed 90 square meter (968sq ft) in any other cities or towns.
Note: The section does not specify if you need to be a Resident to be able to claim this benefit.
The section also does not specify if the residential house should be self-occupied to claim the deduction. So, persons living in rented houses can also claim this deduction.
The deduction can only be claimed by individuals for the house purchases jointly or singly. If a person jointly owns the house with a spouse and they both are paying the instalments of the loan, then both of them can claim this deduction.
The term ‘financial institution’ would mean a banking company to which the Banking Regulation Act, 1949 applies or a banking Institution referred to in section 51 of that Act or a housing finance company. The ‘housing finance company’ means a public company formed and registered in India with the main object of carrying on the business of providing long-term
finance for construction or purchase of houses in India for residential purposes.