Income Tax Section 80EE: Deduction on Home Loan Interest
25 June 2015
DEDUCTION IN RESPECT OF INTEREST ON LOAN TAKEN FOR RESIDENTIAL HOUSE PROPERTY- [SEC.80EE]
Deduction under section 80EE is available if the following conditions are satisfied-
- The taxpayer is an individual.
- He has taken a loan from a Financial institution is bank or a house finance company (i.e. an Indian public limited company formed with the main object of carrying on the business of providing long term finance for construction or purchase of residential house in India).
- The financial institution during the financial year 2013-14 has sanctioned the loan.
- The amount of loan sanctioned for acquisition of the residential house property does not exceed Rs.25 lakh.
- The value of residential house property does not exceed Rs.40 lakh.
- The taxpayer does not own any residential house property as on the date of sanction of loan.
If the above conditions are satisfied, interest payable for the previous year 2013-14 on the aforesaid loan shall be deductible for the assessment year 2014-15(up to a maximum of Rs.1 lakh). If, however, interest payable during the previous year 2013-14 is less than Rs.1lakh or the taxpayer has not claimed the deduction in assessment year 2014-15, the balance amount shall be allowed as deduction in the assessment year 2015-16.
Let us clarify the most important aspect of this section. The deduction under this section is available over and above the deduction of Rs. 2,00,000 available under section 24, which is claimed as a loss under the head house property.
Let’s take an example. An individual, having complied with all of the above-mentioned conditions, pays Rs. 2,00,000 as interest towards his home loan during financial year 2014-15. He unfortunately didn’t claim the deduction u/s 80 EE while filing his tax returns for assessment year 2014-15. In his tax return for assessment year 2015-15, he shall be eligible to claim a deduction of Rs. 2,00,000 u/s 24 and also a deduction of Rs. 1,00,000 u/s 80 EE.