Additional deduction of Rs 1.50 Lakhs on Acquisition of House Property u/s 80EEA


Additional deduction of Rs 1.50 Lakhs on Acquisition of House Property u/s 80EEA


Author Manjiri Gupta

Manjiri S. Gupta



A new Section 80EEA has been inserted by the government to allow for an interest deduction from AY 2020-21(FY 2019-20). Section 80EEA was introduced by the finance minister Nirmala Sitaraman in the Union Budget 2019 with an objective to give a boost to the centre’s “Housing for All by 2022” programme, by way of offering additional tax benefits on the purchase of affordable homes.
Section 80EEA offers a deduction for interest payment upto Rs. 1.50 Lakhs or actual interest paid, whichever is lower.Taxpayer must note that this deduction is over and above the deduction of Rs. 2 Lakhs offered for interest payments through section 24(b) of the Income Tax Act,1961. This implies that an assessee can claim deduction under section 24(b) and an additional deduction under section 80EEA i.e. total deduction of Rs. 3.50 Lakhs.
Only Individual assesses are eligible to claim deduction under section 80EEA.
Conditions to claim deduction:-
  1. The stamp duty value of the residential house property shall be upto Rs. 45 Lakhs.
  2. The loan should be taken from a Bank or Financial Institutions.
  3. The loan should be sanctioned between 1st April 2019 to 31st March 2022. Taxpayer must note that date of sanction is important, date of Sale Deed has no relevance.
  4. Assessee should not be claiming any deduction under section 80EE.
  5. Carpet area of the house property should not exceed 60 square meter ( 645 sq ft) 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)
  6. Carpet area should not exceed 90 square meter (968 sq ft) in any other cities or towns.
  7. The taxpayer should be a first time home buyer means the assessee own no residential house property on the date of sanction of loan.
Incase of Co-owners or joint borrowers, each of them is eligible for claiming the deduction of Rs. 1.5Lakhs under section 80EEA. However, each of them must meet all the conditions.

Now, the question arises, whether the construction of House Property can enable assessee to claim deduction u/s 80EEA?

It must be noted that deduction is eligible for acquisition of House Property. In my view, “acquisition” is a broader term and it includes construction of house property as well.