The Indian Income Tax Act, 1961, provides various deductions and exemptions to taxpayers to reduce their tax liability. Section 80EE is one such provision that offers tax benefits to first-time homebuyers. In this blog, we will discuss Section 80EE of the Income Tax Act in detail.
What is Section 80EE of the Income Tax Act?
Section 80EE of the Income Tax Act was introduced by the Finance Act, 2013, to provide additional tax benefits to first-time homebuyers. The section provides a deduction of up to Rs. 50,000 on the interest paid towards a home loan taken by a first-time homebuyer.
Who is eligible for Section 80EE deduction?
To claim the deduction under Section 80EE, the following conditions must be satisfied:
- The deduction is available only to individuals.
- The deduction is available only to first-time homebuyers. A first-time homebuyer is defined as an individual who has not owned any residential property in India, either in his/her name or in the name of his/her spouse, at the time of sanction of the home loan.
- The home loan must be taken from a financial institution or a housing finance company.
- The loan amount must be less than Rs. 35 lakhs.
- The value of the residential property purchased must not exceed Rs. 50 lakhs.
- The loan must be sanctioned between April 1, 2016, and March 31, 2017.
- The loan must be disbursed before March 31, 2017.
How much deduction is available under Section 80EE?
The deduction available under Section 80EE is limited to a maximum of Rs. 50,000 per financial year. This deduction is in addition to the deduction of Rs. 2 lakhs available under Section 24(b) of the Income Tax Act for interest paid on a home loan.
It is important to note that the deduction under Section 80EE is available for the first-time homebuyers only for a period of 2 years, i.e., the financial year in which the loan was sanctioned and the next financial year.
How to claim deduction under Section 80EE?
To claim the deduction under Section 80EE, the taxpayer needs to fill in the details of the home loan and the interest paid on the loan in the Income Tax Return (ITR) form. The taxpayer needs to submit the necessary documents, such as loan sanction letter and interest certificate, to support the claim.
Conclusion
Section 80EE of the Income Tax Act provides an additional tax benefit to first-time homebuyers. The deduction of up to Rs. 50,000 on the interest paid towards a home loan is available for a period of 2 years. To claim the deduction, the taxpayer must satisfy the eligibility criteria and submit the necessary documents along with the ITR form.
Other Related Blogs: Section 144B Income Tax Act
Frequently Asked Questions (FAQs)
Q.1 What is Section 80EE of the Income Tax Act?
Section 80EE of the Income Tax Act is a provision that offers tax benefits to first-time homebuyers by providing a deduction of up to Rs. 50,000 on the interest paid towards a home loan.
Q.2 Who is eligible for the deduction under Section 80EE?
The deduction is available only to individuals who are first-time homebuyers. A first-time homebuyer is an individual who has not owned any residential property in India, either in his/her name or in the name of his/her spouse, at the time of sanction of the home loan.
Q.3 What is the maximum deduction available under Section 80EE?
The maximum deduction available under Section 80EE is limited to Rs. 50,000 per financial year. This deduction is in addition to the deduction of Rs. 2 lakhs available under Section 24(b) of the Income Tax Act for interest paid on a home loan.
Q.4 What is the loan amount limit under Section 80EE?
The loan amount must be less than Rs. 35 lakhs to be eligible for the deduction under Section 80EE.
Q.5 What is the value of the residential property limit under Section 80EE?
The value of the residential property purchased must not exceed Rs. 50 lakhs to be eligible for the deduction under Section 80EE.
Q.6 What is the time period for which the deduction is available under Section 80EE?
The deduction under Section 80EE is available for the first-time homebuyers only for a period of 2 years, i.e., the financial year in which the loan was sanctioned and the next financial year.
Q.7 Can the deduction be claimed for a home loan taken for a second property?
No, the deduction is available only for the first-time homebuyers who have taken a home loan for their first residential property.
Q.8 Can the deduction be claimed for a home loan taken from a friend or relative?
No, the deduction is available only for the home loans taken from a financial institution or a housing finance company.
Q.9 Can the deduction be claimed if the loan was sanctioned before April 1, 2016?
No, the deduction is available only for the loans sanctioned between April 1, 2016, and March 31, 2017.
Q.10 What documents are required to claim the deduction under Section 80EE?
The necessary documents, such as loan sanction letter and interest certificate, need to be submitted to support the claim for deduction under Section 80EE.
