Section 80EE offers income tax savings for the interest component of a residential housing loan made available by any financial institution. One can assert a deduction of ₹50,000 for each FY as defined in this section. You will continue to assert this deduction till you have completely repaid your loan.
Section 80EE of the Income Tax Act, 1961 allows for a tax deduction profit on the interest earned mostly on home loan earned by the very first time home purchaser. Such a purchaser may receive a tax deduction of up to ₹50,000 u/s 80EE. This should be remembered that perhaps the tax-deductible cap accessible u/s 80EE is beyond and above what has already been given under Section 80C and Section 24 of the IT Act, 1961.
Section 80EE: Eligibility Criteria
- Individual taxpayers who have purchased a house and borrowed a home loan may receive a tax-deductible gain u/s 80EE.
- The house valuation must be ₹50 lakh or less.
- The home loan available must be ₹35 lakh or less.
- The deductible cap is up to ₹50,000 a year and is only applicable to the interest accrued on the home loan.
- The loan must be approved by a recognized financial institution and distributed during April 2016 and March 2017.
Section 80EE: Key Features
- Under Section 80EE, an extra tax exemption of ₹50,000 could be sought. This is inclusive of the deduction cap up to ₹1.5 lakhs accessible under Section 80C & up to ₹2 lakhs accessible u/s 24 of the IT Act 1961.
- The tax benefit could only be received by an individual taxpayer. Organizations such as HUF (Hindu Undivided Family), AOP (Personal Association), etc. aren’t really qualified for tax benefits u/s 80EE. That being said, a deduction may be asserted if the property is purchased together (by 2 or more individuals).
- In the event of a joint partnership with a partner, the tax benefit should be asserted correspondingly by both partners. It is not mandatory for the creditor to live in the property by which the tax deduction is asserted. One may profit from the property purchased while residing in rented accommodation That being said, this advantage must only be claimed until the ownership of the house has been accomplished.
- It should be remembered that the tax advantage referred to in section 80EE will only be applicable after the advantage of the home loan interest rate referred to in section 24 has been expended. So if you have sought tax deductions ₹2 lakhs under section 24 only then you can demand an extra tax deduction of ₹50,000 u/s 80EE.