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Additional Deduction on Home Loan under section 80EE of Income Tax Act

Finance Bill of 2013 (Subject to approval by Parliament of India)  has inserted the new section 80EE in the Income Tax Act, 1961 for giving additional deduction benefits for interest payable on loan, taken between 1.04.2013 to 31.03.2014 for new house and maximum allowable deduction is Rs 1 lakh to individual assessee as their house warming gift but this additional deduction of subject to certain conditions.  Like Loan take between 1.04.2013 to 31.03.2014, Loan Amount of cannot exceed Rs 25 Lakhs, Value of House must be less than Rs 40 Lakhs and person should not own other house property. Read Investment Option for Claiming Deduction under Income Tax

  1. The loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2013 and ending on the 31st day of March, 2014;
  2. The amount of loan sanctioned for acquisition of the residential house property does not exceed twenty-five lakh rupees;
  3. The value of the residential house property does not exceed forty lakh rupees;
  4. The assessee does not own any residential house property on the date of sanction of the loan.

Reference: Section 80EE of the Income Tax Act, 1961

Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provisions of the Act for the same or any other assessment year.

‘80EE. (1) In computing the total income of an assessee, being an individual, there shall be
deducted, in accordance with and subject to the provisions of this section, interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential house property.
(2) The deduction under sub-section (1) shall not exceed one lakh rupees and shall be allowed in computing the total income of the individual for the assessment year beginning on the 1st day of April, 2014 and in a case where the interest payable for the previous year relevant to the said assessment year is less than one lakh rupees, the balance amount shall be allowed in the assessment year beginning on the 1st day of April, 2015.
(3) The deduction under sub-section (1) shall be subject to the following conditions, namely:—
(i) the loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2013 and ending on the 31st day of March, 2014;
(ii) the amount of loan sanctioned for acquisition of the residential house property does not
exceed twenty-five lakh rupees;
(iii) the value of the residential house property does not exceed forty lakh rupees;
(iv) the assessee does not own any residential house property on the date of sanction of the loan.
(4) Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provisions of the Act for the same or any other assessment year.
(5) For the purposes of this section,—
(a) “financial institution” means a banking company to which the Banking Regulation Act, 1949 applies including any bank or banking institution referred to in section 51 of that Act or a housing finance company;
(b) “housing finance company” means a public company formed or registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes.’.

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One thought on “Additional Deduction on Home Loan under section 80EE of Income Tax Act
  • Amrutha says:

    Sir
    In the paragraph given below towards the last line its written – person should own other house property whereas in Reference: Section 80EE of the Income Tax Act, 1961 its given in
    (iv) point- the assessee does not own any residential house property on the date of sanction of the loan.
    can u please make it clear…

    Finance Bill of 2013 (Subject to approval by Parliament of India) has inserted the new section 80EE in the Income Tax Act, 1961 for giving additional deduction benefits for interest payable on loan, taken between 1.04.2013 to 31.03.2014 for new house and maximum allowable deduction is Rs 1 lakh to individual assessee as their house warming gift but this additional deduction of subject to certain conditions. Like Loan take between 1.04.2013 to 31.03.2014, Loan Amount of cannot exceed Rs 25 Lakhs, Value of House must be less than Rs 40 Lakhs and person should own other house property.