Section 80EEA - Deduction in respect of interest on loan taken for certain house property

In computing the total income of an individual for the financial year and not claiming a deduction under section 80EE, the individual 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. 1,50,000 and shall be allowed in computing the total income for the Assessment Year beginning on the 1st day of April, 2020 and subsequent assessment years.

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

  • The loan amount shall be sanctioned during the Financial Year 2019-20. In the finance Act, 2020, the period of sanction has been allowed upto March 31, 2021. 
  • The stamp duty value of residential property does not exceed Rs. 45 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.

The conditions with regards to the carpet area of the house property have been specified in the memorandum to the finance bill, but not mentioned in section 80EEA. This definition will be effective for projects approved on or after September 01, 2019:

  • Carpet area of the house property should not exceed 60 square meter in metropolitan cities of Bengaluru, Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region)
  • Carpet area should not exceed 90 square meter (968 sq ft) in any other cities or towns.

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 80EEA as this deduction is in addition to limit as stated in section 24 of the Income Tax Act.