Section 80EEA of Income Tax Act
Section 80EEA of Income Tax Act
Homeownership is a dream for many today. Regardless of the state or the type of house you want, the financial burden of purchasing your dream home can be overwhelming. To help with some financial relief, the Indian government offers various schemes for deductions under different sections of the Income Tax Act.
One such section is 80EEA of the Income Tax Act. Under this section, individuals can deduct additional interest payments on a housing loan to improve affordability.
In this blog, we will discuss in detail all about 80EEA tax benefits, 80EEA eligibility, types of deductions under 80EEA Income Tax, updates on 80EEA deduction for AY 2023-24, and much more.
What is Section 80EEA of the Income Tax Act?
Section 80EEA of the Income Tax Act allows you to benefit from a yearly deduction in the interest payments against a home loan to reduce the financial burden of a home purchase by a small margin.
As per the 2019 Union Budget, the 80EEA was introduced to extend more tax benefits for people buying houses. Under Section 80EEA of the Income Tax Act, all housing loans for first-time home buyers, taken between 1st April 2019 to 31st March 2022, can avail of a deduction of up to ₹1,50,000 from the interest payments.
All these yearly deductions under Section 80EEA of the Income Tax Act are only available for up to 5 years from the date of sanction. Moreover, you must use the loan amount towards the purchase of property and not for construction or interior work, as that will make you ineligible for this deduction.
Initially, only Section 80EE was introduced, which allowed a deduction of up to ₹50,000 towards interest payments for home loans. However, it was only applicable for loans taken between 1st April 2016 to 31st March 2017.
80EEA Deduction Eligibility
To be eligible for an 80EEA deduction, you must meet the following criteria:
You must not own any other residential property.
You must be a first-time buyer.
You must have taken a home loan from a financial institution or company.
You must use the loan amount only to acquire a house or property with a value of up to ₹45 lakhs or less, but not for construction or any other housing work.
The loan date of sanction should be between 1st April 2019 to 31st March 2020.
You should not have claimed any other tax benefit or deduction on interest payments for home loans in the same financial year.
Terms for Claiming 80EEA Deduction
In addition to the eligible criteria mentioned above, you must comply with specific terms and conditions to take the 80EEA deduction:
Only individuals with home loans for first-time home purchases are eligible for this deduction.
You can only avail of a deduction of a maximum of ₹1,50,000 against the yearly interest payments for your home loan.
The home loan amount should not exceed ₹35 lakhs, and the property purchase value should be less than ₹45 lakhs.
The 80EEA deduction is available for only 5 years from the loan sanction date and year.
This deduction is only available for interest payments toward a home loan. No principal payments are covered under this section.
The property being purchased should be new. This does not cover old presale or pre-occupied properties.
There is no income level requirement for the 80EEA deduction.
You can claim an 80EEA deduction in addition to a Section 24 deduction for interest payments for more affordable housing.
No unclaimed deductions can be carried forward to the following year.
Types 80EEA Tax Benefit and Deduction
Tax Deductions
| Deduction | Description |
|---|---|
| Stamp Duty and Registration Fees | It is a one-time deduction applicable for the year of registration and stamp duty expenses. However, the maximum deduction limit has to be maintained at ₹1,50,000/- |
| Interest Payments for Properties that are under construction | For pre-construction properties, the home loan interest deduction is divided into 5 equal instalments for 5 years. |
| Deductions under Section 24B | Under Section 24B, you can take a maximum deduction of ₹2,00,000 per year. However, the property acquisition or construction must be completed within 5 years to be eligible. |
Tax Benefits
| Benefit | Description |
|---|---|
| Joint Home Loan | "If you take a home loan jointly, both you and the other borrower(s) are eligible for an interest payment deduction of up to ₹2,00,000 under Section 24B.
Moreover, all borrowers can also claim a principal amount deduction of up to ₹1,50,000 under Section 80C | "
| Second Home Loan | There are some deductions possible for a second home loan. However, these tax benefits rely solely on the numerous restrictions and terms of other sections under the Income Tax Act. |
Need of Health Insurance
Along with the rising costs of land and property purchases, healthcare expenses are also on the rise. To provide some financial support, Section 80D of the Income Tax Act offers tax deductions on health insurance premiums.
Thus, purchasing medical insurance India will offer you two significant benefits. The first one is a financial safety net in times of medical emergencies to reduce the financial burden of the policyholder, and the second is tax deductions.
Tata AIG offers a range of health insurance plans with various add-ons to provide maximum customisation flexibility to cater to individuals' specific needs. From individual and group health insurance plans to health insurance for senior citizens, you can plan and invest in the plan that aligns with your coverage needs and budget.
With our medical insurance plan, you can also enjoy the convenience of cashless treatments at any hospital in India. #GoCashless
Disclaimer / TnC
Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.
Related Articles
Can an NRI avail of the tax deductions under Section 80EEA?
Can an NRI avail of the tax deductions under Section 80EEA?
Yes, both residents and non-residents of India can claim this 80EEA deduction.
Are Sections 80EE and 80EEA different?
Both Section 80EE and 80EEA allow first-time homebuyers to avail of an interest payment deduction on their housing loan. However, the deduction limit is different for both of them. For Section 80EE, the deduction amount can go up to a maximum of ₹50,000, and for Section 80EEA, the deduction amount can go up to a maximum of ₹1,50,000.
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