Section 80EE: New section In budget to allow increased housing loan deduction

This article is written by Aashish Ramchand, a Chartered Accountant by profession. Aashish is the co-founder of makemyreturns.com. He also has completed his CFA Level I (American) and is very passionate about writing articles on taxes and tax advisory. He can be reached at connect@makemyreturns.com

A new section has been introduced in the income tax act i.e. Section 80 EE. This section has been introduced to cater to the need for affordable housing. This section allows for a deduction up to Rs. 100000/- for the AY 2014-15 (i.e. FY 2013-14) to individual assesses for interest payable on their housing loan. Few conditions are required to be satisfied for this section to be applicable.

1)  The loan is sanctioned between the FY 1/4/2013-31/3/2014.

2)  The loan sanctioned does not exceed Rs. 25 Lakh.

3)  The value of residential house does not exceed Rs. 40 Lakhs.

4)  The assessee does not own any other residential house as on the date of sanction of the loan. In other words, this house is supposed to be his self occupied property.

5)  The assessee is a first time home buyer

Where the interest payable is less than Rs. 100000/- for AY 2014 – 15, then the balance amount shall be allowed in AY 2015-16. If a deduction under this section is allowed for any interest, no deduction shall be allowed in respect of such interest under any other provisions of the Act. The benefit under this section is mainly for one time primarily for AY 2014-15 and to a certain extent for AY 2015-16 for balance interest as mentioned above.

Also it is important to note that this deduction is in addition to the deduction of Rs. 150000/- in respect of interest on loans for self occupied property U/s 24(b). This is the current scenario as per the tax laws i.e. there is a maximum deduction of Rs. 150000/- on interest on housing loan for one’s self occupied property.

In my opinion, this new section would benefit the low to medium income section of assesses. It will greatly benefit such people who are first time house buyers as not only do they get a deduction up to Rs. 150000 for interest paid on housing loan but also an additional deduction of Rs. 100000/- from their gross total income as a result of introduction of this section.

It can be said that since the maximum cap of housing loan amount is Rs. 25 lakhs, on an average the yearly interest obligation on such loans amounts to Rs. 2.5 – 2.75 lakh. Thus as a result of this section, an individual can now effectively claim this entire interest expense as a deduction (i.e. 150000/- as per Section 24 (b) + Rs. 100000/- as per Section 80EE) from his gross total income and reduce his tax obligation accordingly.

59 thoughts on “Section 80EE: New section In budget to allow increased housing loan deduction”

  1. I have satisfied all conditions for claiming 80 ee

    last year my interest component was just 35,000 & I claimed it under sec 24

    this year I am having interest component 2,30,000/-

    so can I claim 2,00,000/- under sec 24 & remaining 30,000/- under 80ee

    Is it Ok???

  2. Hi All,

    Hope you are doing well.

    Kindly let me know whether Section 80EE and Section 80CCG is applicable for FY 2015-16.

    Regards
    Rajendra

  3. Hi,

    I have purchased two adjacent houses. Both purchases are done on same day in 13-14.
    For both properties I have two separate Housing loans sanctioned in 2013-2014.
    Property including both is around 32.5 lac and loan sanctioned around 13.8 lac per property.

    As condition the property should be 1st property for that person who wish to avail it i.e. he should not have another property prior,
    so the question is – can I avail 80EE – 1 lac additional benefit? Is my properties are considered as 1st properties or 2nd properties?

    Please let me know. I wanted to avail additional benefit of 1 lac this year.

  4. Hi,
    I am a Government servant and purchased a property availing Home loan. I am staying in the same house and receiving HRA. I am claiming interest benefit for the home loan. I would like to know whether total amount of HRA is taxable or any deductions cane be claimed towards annual maintenance incurred and Municipal Taxes paid towards the property?

    Tks and Rgds

    Srinivas

  5. sir If home loan taken in joint names in 2012 for Rs, 50.lacs ,whether rebate for HBA and interest on loan is admissible to both the coborrowers under section 80 EE Pl. clarify.

  6. Sir
    I have doubt about home loan taken by any one jointly for Rs. 40 lacs before 1.3.2014 . Can I claim rebate of Rs. 1,50,000/ HBA and interest of Rs . 200,000/- under section 80 EE to each member GD Bhatia

  7. Sir
    I have doubt about home loan taken by any one jointly for Rs. 50 lacs before 1.3.2014 . Can I claim rebate of Rs. 1,50,000/ HBA and interest of Rs . 200,000/- under section 80 EE to each member GD Bhatia

  8. If joint home loan taken for Rs. 50 laks in 2013-2014,whether deduction under section 80 E is admissible to both the coowner of the property
    G D Bhatia

  9. I have one doubt regarding eligiblity of dedcution u/s 80EE.

    If joint loan taken of Rs. 50 Lacs. ( 50% – 50% sharing ratio)

    Whether eligible for deduction

  10. I booked a underconstruction house in 2012 and took home loan from nationalised bank. Due to delay in construction I cancelled my booking without taking possession in 2014 and got my money back with interest on it from the builder. Do I have to pay income tax on the whole interest I got or the home loan interest will be deducted from it?

  11. Hello i took 30 lakhs loan from SBI bank in this period 1/4/2013 – 1/3/14
    and property is under construction mean while i m paying interest to bank per month 18k. So i m eligible for rebate for this year plz

  12. Me and my wife have a joint ownership of the property of less than 40 lakhs Loan sanctioned in 2013

    1) I have sanctioned the loan of 29 lakhs although I have only going to leverage 25 lakh. Is it still imp to have the loan sanction 25 L itself or the scenario I mentioned will work where the sanctioned amount is more than actual leveraged?

    2) I have this as a second property but my wife’s first can my wife avail the additional 1L benefit if not me ?

  13. Hi Manshu,
    I request you to comment on my scenario.
    Description of the scenario:
    I have taken an under-construction property and the total pre-construction period interest is: 1,60,000/-
    If I divide this by 5, that is 32,000/- can be claimed in 5 consecutive years.
    Questions:
    1. What if in the next year I pay 1, 60,000/- as interest and I still need to claim pre-construction period interest.
    Taking into consideration that only 1,50,000/- as interest can be claimed in a financial year.
    2. Is it mandatory to claim the pre-construction interest in 5 consecutive years only? Can it be taken in a lifetime?
    3. Am I eligible for 80EE if my loan was sanctioned on 29 Jan, 2013 and I got the 1st disbursement (Cheque) on 05 May, 2013? The loan is a joint loan.
    4. If 80EE is applicable for me, in the income tax excel sheet can I show a negative income of -250000 for the income from 1st house?

    1. Dear visitors,

      Actually Speaking..This sec is not applicable for any loan/house taken or purchased before A.Y 2014-15.
      It clearly says that the sec is new and is applicable w.e.f :- 1/4/2014.

    2. Dear visitors,

      Actually Speaking..This sec is not applicable for any loan/house taken or purchased before A.Y 2014-15.
      It clearly says that the sec is new and is applicable w.e.f :- 1/4/2013

  14. i have taken loan for 23 lak, on aug-2013 from SBI,,, for house property 25 lak which is on construction expecting completion by Nov-2014 ….
    but my EMI starts from jan-2016 ( ie after 15 months ), how shall i get benefit of interest under 80EE or section 24…. ( i am aware till possesion principle in 80 C cant be availed )

    1. sir i ve taken loan exectly as 80ee described. but my possession is expected on nov 14. can i avail rebate as per 80ee

  15. Hi,

    I have a loan of Exact 25 lakhs sanctioned during this FY 2013-14. I haven’t taken the possession of the flat. I would be getting it during Jan-Feb 2014 period. So can i make a claim on both HRA+ Interest on home Loan with this additional benefit(sec80EE) or Just HRA+Principal+Sec80EE(additional benefits)? I want to get the details ASAP, so that i declare accordingly.

    Thanks
    Nitin

  16. Hi,

    I have purchased a residential plot for residential purpose in the year 2013-14. This is my first property indeed. The value of the site would be app 15 lakhs. I have taken a loan of Rs. 9 lacs. This loan is the purpose of a site. it is a vacant site.

    Can i avail the benefits under 80EE? Please confirm.

    Thanks

    Tulasi Ram T N

Leave a Reply

Your email address will not be published. Required fields are marked *