Income Tax
Benefit on Home Loan Interest under Section 80EE Of Income Tax Act. For the
A.Y. 2014-15 and A.Y. 2015-16
Introduction- Finance Minister inserted a new section 80EE relating to
the additional deduction in respect of interest on loan taken for residential
house property. Assessee can avail the benefits of this section in two A.Y.
2014-15 & 2015-16. Purpose of this section is to promote house ownership
& give a fillip to a number of industries like steel, cement, brick, wood
etc. besides jobs to thousands of construction workers.
Applicability- Benefit of this section can avail by Individual assessee.
Deduction under this section is not available for any other assessee (like HUF,
firm etc.). Individual can claim benefit under this section only when all the
following conditions are satisfied, these are-
- Purchaser
should be first time buyer. i.e. he has never purchased any house and now
he is going to purchase a house.
- Value of
the house should not more than 40 lakh.
- Loan
taken by Individual for the purpose of buy a house should not be more than
25 lakh.
- On the
date of sanction of loan individual does not have any own residential
house property.
- Loan for
this purpose taken by individual should be from the Financial Institution
or Housing Finance Company.
- For this
purpose, loan should be sanctioned between 01.04.13 to 31.03.14.
U/s 80EE (4) - Provides that where a deduction under this section is allowed
for any interest payable on loan only when 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.
Quantum of Deduction- Assessee can take deduction u/s 80EE on interest payable on
home loan upto 1 Lakh in A.Y.2014-15. It can claim deduction in two assessments
year. Means if whole amount of interest payable upto 1 lakh is not claim as
deduction in A.Y.2014-15 then remaining balance amount upto 1 lakh can claim in
A.Y.2015-16.Total deduction under this section shall not be more than 1 lakh.
Example-
Assessee has taken a loan for the purpose of residential house property &
interest payable on loan Rs. 90000/- for the A.Y.2014-15.In this case assessee
can claim deduction 90000/- in A.Y.2014-15 and other remaining balance i.e. Rs.
10,000/- ,can claim in A.Y.2015-16
Clarification of Section 24 and 80EE-
Where the property has been acquired, constructed, repaired,
renewed or reconstruction with borrowed capital, the amount of any interest
payable on such capital is deductible under section 24(b), subject to the prescribed
conditions.
As per Sub Section 4 section 80EE, assessee can avail deduction in respect of
interest payable on loan only when assessee does not claim any deduction in
respect of such interest in any other provisions of the Act.
However Finance Bill , 2013 contain an announcement of additional deduction of
interest on housing loan for first time buyer state that-
I propose to allow such home buyers an additional deduction of interest of
Rs.100000/- to be claimed in A.Y.2014-15. If the limit is not exhausted, the
balance may be claimed in A.Y.2015-16. This deduction will be over and above
the deduction of Rs.150000/-allowed for self occupied properties under section
24 of the income tax Act.
So
as per above explanation there is clash between Sub section 4 of section 80EE
and as per announcement under para 132.So according to me assessee may also
claim additional deduction U/s 80EE apart from deduction U/s 24.
Key Notes
1)
Deduction available to individual only not to other persons.
2)
Deemed owner concept does not apply in respect of such deduction.
3)
Spouse would not disqualify for relief U/s 80EE in case of residential house
purchased in joint names.
4)
Assessee can purchase house for both purpose .i.e. it can be for self occupied
or can be Non self occupied.
5)
Interest includes “any service fee or other charges in respect of money
borrowed or processing fees”.
6)
Date of make application to loan irrelevant but date of sanction of loan is
relevant.
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