Section 80EE- Income Tax Deduction for Interest on Home Loan

Introduction

The Section 80EE income tax deduction is a great way for taxpayers to save money. This section of the Income Tax Act allows individuals who have taken a home loan to get an additional deduction on the interest payments towards that loan. With this, taxpayers can save more on their taxes and make home ownership an easier and financially secure option. This article will explore what the Section 80EE deduction entails and how you can use it. 

What is Section 80EE of the Income Tax Act?

The Section 80EE of the IT Act is a section that provides an additional deduction to individuals who have taken a loan to buy a residential house. This deduction can be claimed against the interest payments made on the home loan, and up to Rs 1 lakh can be deducted from taxable income in one financial year. The taxpayer must fulfill certain conditions to be eligible for claiming this deduction.

Features of the 80EE Deduction

●    The 80EE deduction can be claimed on the interest payments made towards a home loan, up to Rs 1 lakh.
●    This deduction is available only for first-time homebuyers and is not applicable to subsequent loans.
●     To claim this deduction, the taxpayer must furnish all relevant documents, such as a PAN card, home loan agreement, salary slips, and Form 16.
 

Conditions to be met for Claiming Deduction

●    The loan should be taken between 1 April 2016 and 31 March 2017.
●    The individual should not have any other existing home loan when taking this loan.
●    The taxpayer should not own more than one house property.

Things to Remember

The 80EE deduction is a great way for taxpayers to save on taxes. However, you must meet all the eligibility criteria and conditions to claim this deduction. When filing your return, ensure you provide all necessary documents, such as your PAN card, home loan agreement, salary slips, and Form 16. Remember that this deduction is only available for first-time homebuyers, so if you have previously taken a loan to buy a house, you won't be eligible to claim this deduction.

It's also vital to remember that the maximum amount of this deduction cannot exceed Rs 1 lakh in one financial year, and the loan amount shouldn't exceed Rs 35 lakhs. Additionally, the value of the house property shouldn't exceed Rs 50 lakhs.

Overall, claiming the 80EE deduction is a great way to save money on your taxes and make home ownership an easier and more financially secure option for individuals. 
 

Section 80EE and Section 24

Section 24 of Income Tax Act allows individuals for a deduction of up to Rs 2 lakhs on interest payments made towards the home loan. However, this deduction applies only to self-occupied properties and cannot be claimed if the house property is rented out or used as collateral security.

On the other hand, Section 80EE provides an additional deduction of up to Rs 1 lakh on interest payments made towards a home loan for first-time homebuyers. 
 

Section 80EE and Section 80EEA

Section 80EEA is a new section that was introduced in the Budget 2019. This section allows for an additional deduction of up to Rs 1.5 lakhs on interest on home loans from any financial institution, such as banks and housing finance companies.