Section 80EE - Income Tax Deduction for Interest on Home Loan

In computing the total income of an individual for the financial year he shall be allowed a deduction of interest payable on loan taken from any financial institution for the purpose of acquisition of a residential property.

The maximum deduction under this section should be Rs. 50,000 and shall be allowed in computing the total income for the Assessment Year beginning on the 1st day of April, 2017 and subsequent years.

The deduction under this section shall be subject to following conditions:

The loan amount shall be sanctioned during the Financial Year 2016-17.
The amount of loan sanctioned for the acquisition of residential property shall not exceed Rs. 35 lakh rupees.
The value of residential property does not exceed Rs. 50 lakh rupees.
The individual does not hold any other residential house property on the date of sanction of loan.

Where a deduction is claimed under this section, no such deduction shall be allowed under any other provision of this Act for the same or any other assessment year.

It is advisable to the individual to first exhaust the deductible limit of Rs. 2 Lakh as stated in Section 24 and then claim the additional benefits under section 80EE as this deduction is in addition to limit as stated in section 24 of the Income Tax Act.

The union budget 2019 has introduced a new section 80EEA to extend the tax benefits of the interest deduction up to Rs. 1,50,000 for housing loan taken for affordable housing during the period 1 April 2019 to 31 March 2020. Please read our article on Section 80EEA.