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What is Section 80EE? How does it help in deduction of Home Loan Interest Rates in India?

Posted by : Premraj | Posted on : Wednesday, January 29, 2020


Under the Income Tax Act, 1961, Section 80EE is one that provides income tax benefit on the interest portion of the home loan availed by the taxpayer from any financial institution. According to this, interest paid on the home loan can be availed as a deduction from the total income of the borrower, subject to the specified upper limit.

This section was originally introduced in the financial year 2013-14 and offered a maximum benefit of Rs. 1 lakh, which was available for the years 2013-14 and 2014-15. When it was reintroduced in 2016-17, the deduction was reduced to its present limit of Rs. 50,000.

Home loan interest rates end up inflating the repayment amount to a great extent. Section 80EE provides the much-needed respite to aspiring homebuyers. The benefits of this section are available only for first-time homebuyers for a house costing Rs. 50 lakhs or less and against a loan amount of up to Rs. 35 lakhs only.

The benefits of this section are available throughout the tenure of the loan and can be availed up to Rs. 50,000 in a year. Other preconditions for availing the deduction under section 80EE include that the loan should not be availed for commercial purposes, it must be sanctioned by a housing finance company or a financial institution, and the loan must have been sanctioned during the fiscal year 2016-17.

To be eligible for a deduction under section 80EE, the person claiming it must be an individual. Hindu Undivided Family (HUF), Association of Persons (AOP), companies, trusts, etc., are not eligible for the tax benefits under this section.

While claiming this benefit, one can check if he or she qualifies for the benefits of Section 24 as well. Section 24 allows a deduction of up to Rs. 2 lakhs on the home loan interest. It is allowed only when the owner, or his or her family member(s), reside in the property. In case the property is on rent, the entire interest is waived off. If the taxpayer is eligible for deductions under Section 24 as well as 80EE, he or she can claim the benefits under both sections.

Leading home loan lender, Tata Capital offers loans at attractive interest rates and a flexible tenure of up to 30 years. Try the Tata Capital home loan EMI calculator to find out the monthly repayment burden. Tata Capital also assists with all home loan-related queries that a potential borrower may have. So, reach out to Tata Capital today

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