Section 80EE: Deduction in respect of interest on loan taken for residential house property
CBDT has introduced section 80EE of Income Tax Act, 1961 w.e.f. 01.04.2017 i.e., deduction under this section is available from A.Y. 2017-18 and also available for subsequent Assessment years.
The provisions of the Section are summarized below:-
1. Only an Individual assessee can take the benefit of this section.
2. This section allows deduction only for interest portion of a housing loan.
3. Deduction under this section will be in addition of Section 24(b) (deduction for interest component under the head ‘Income from house Property’). But you cannot claim same amount of interest under both sections.
(To elaborate this let us take an example. Suppose you have paid Rs. 2,60,000/- in F.Y. 2016-17 as interest on housing loan for self occupied property. From the whole amount of Rs. 2,60,000/-, Rs. 2,00,000/- can be claimed as deduction u/s 24(b) for interest component under the head ‘Income from house Property’ & Rs. 50000/- can be claimed u/s 80EE under deductions under Chapter VIA. Total interest available for deduction is Rs. 2,50,000/-)
4. Total deduction under this section will be Rs. 50,000/- or less.
5. To claim deduction under this section, following 4 conditions must have to be satisfied:-
1. The loan has been sanctioned by the financial institution or Housing Finance Company from 01.04.2016 to 31.03.2017.
2. Loan amount should be Rs. 35 Lacs or less.
3. Value of residential house property should be Rs. 50 Lacs or less.
4. He/she does not own any house property as on the date of sanction of loan.
Our Comment: Now the Government is giving extra tax benefit to the assessee who is buying a budget house for accommodation which is considered as a basic necessity.
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