Section 80EE of Income Tax Act, 1961 deals with the deduction of income tax in respect of interest on loan taken for residential purposes.
Section 80EE of Income Tax Act
This section allows tax benefits for first time home buyers. Under section 80EE of Income Tax Act, an assessee can claim deduction on home loan interest up to Rs. 50000. This limit is over and above the limit of Rs. 200000 U/S 24 and Rs. 150000 U/S 80C. An assessee can claim deduction regardless of his/her residential status.
Conditions for section 80EE
- The deduction under this section is available only to the individuals who have purchased property either singly or jointly and not to HUF, AOP or any other type of taxpayer. Individuals staying in a rented accommodation can also claim this deduction.
- The taxpayer must have taken loan from any recognized financial institution or a housing finance company and for his/her first residential house property.
- The value of the house property must not be above Rs. 50 lakhs.
- The loan taken for the house property must not be above Rs. 35 lakhs.
- The loan must have been sanctioned from 1st April 2016 to 31st March 2017.
- You must own no other house property at the date of sanction of loan.
- The property can be either self-occupied or non-self-occupied.
- You cannot claim deduction U/S 24 again if you have already claimed deduction U/S 80EE.
This section is reintroduced with effect from FY 2016-17; with the limit of a deduction up to Rs. 50000 per FY starting from FY 2016-17 and subsequent years; until the loans are repaid.
The deduction allowed is per person and not per property. Thus, you can claim the deduction separately if you have purchased a property jointly or have taken a joint home loan. For claiming the deduction U/S 80EE, you need to furnish the statement provided by the lender indicating the amount payable and paid towards interest and principal.
For the purposes of this section, “financial institution” means a banking company to which the Banking Regulation Act, 1949 applies including any bank or banking organization referred to in section 51 of that Act or a housing finance company. “Housing Finance Company” indicates a public company formed or registered in India with the primary object of carrying on the business of rendering long-term finance for construction or purchase of houses in India for residential purposes.