Amount of Deduction
The FM has proposed an additional deduction of Rs 1.5 lakh for the interest paid on the home loan for residential house property. Currently, the interest paid on home loan up to Rs 2 lakh in a year for a self-occupied property qualifies for deduction under section 24 of the Income Tax Act. The total amount of deduction available to the taxpayer will, therefore, become Rs 3.5 lakh a year.
Conditions to claim additional deduction u/s 80EEA
- Loan to be sanctioned by the financial institution during the period beginning on the 1st April, 2019 to 31st March 2020.
- The taxpayer should be a first-time home buyer i.e. he does not own any residential house property on the date of sanction of loan.
- The section does not specify the Residential status to claim this benefit. “Therefore, it can be concluded that both resident and non-resident Indians can claim this deduction.
- The section also does not specify if the residential house should be self-occupied to claim the deduction. So, borrowers living in rented houses can also claim this deduction.
- The stamp duty value of house property should not exceed Rs 45 lakh.
- If you have already availed a deduction under this section, same interest amount cannot be availed under any other section of the Income Tax Act.
- You will be eligible for deduction under the section, if
- The carpet area of your home is not exceeding 60 square meter ( 645 sq ft) in metropolitan cities
- The carpet area of your home is not exceeding 90 square meter (968 sq ft) in cities or towns other than metropolitan cities (Definition of affordable housing).
Under Section 24, home owners can avail a deduction for interest payments up to Rs 2 lakh on their home loan, if the owner or his family resides in the house property. The deduction of up to Rs 2 lakh applies even when the house is vacant. If you have rented out the property, the entire home loan interest is allowed as a deduction.
First, Claim your deductible limit under Section 24, which is Rs 2 lakh. Then, go on to claim the additional benefits under Section 80EEA. Therefore, this deduction is in addition to the Rs 2 lakh limit allowed under Section 24.