How to claim Rs 1.5 Lakhs Home Loan Interest Deduction u/s 80EEA under the Affordable Housing Scheme in 2021-22?

How to claim Rs 1.5 Lakhs Home Loan Interest Deduction under section 80EEA under the Affordable Housing Scheme in 2021-22How to claim Rs 1.5 Lakhs Home Loan Interest Deduction u/s 80EEA under the Affordable Housing Scheme in 2021-22?

With a continued focus on “Housing for all”, Govt of India has floated an affordable housing scheme earlier in 2019, which provides Rs 1.5 Lakhs additional interest deduction u/s 80EEA. This scheme is now extended to 31st March, 2022 in the budget announced a few days back. If you are buying your dream home, you can enjoy this additional interest deduction. However, there are certain terms and conditions to avail such interest deduction. How to claim Rs 1.5 Lakhs Home Loan Interest Deduction u/s 80EEA under Affordable Housing Scheme in 2021-22?

Also Read: EPF Interest Tax above Rs 2.5 Lakhs contribution – Who need to pay and who need not?

What are rules and guidelines to claim Rs 1.5 Lakhs Home Loan Interest Deduction u/s 80EEA under Affordable Housing Scheme in 2021-22?

Here are the rules and guidelines to avail this interest deduction.

This exemption is only for individuals and not available for other taxpayers.

Residential property / Houses valued under Rs 45 Lakhs would fall under affordable housing category. Only this category is eligible to get interest deduction. When I say valued, stamp duty value of the house property should not exceed Rs 45 Lakhs.

This scheme was floated earlier in July, 2019, which was valid till 31st March, 2021. This affordable home scheme is now extended till 31st March, 2022 i.e. for 1 more year.

Home loan must be taken from a bank or financial institution for buying this residential property.

For this extended period, the home loan should be taken between 1st April, 2021 to 31st March, 2022.

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An individual should not be entitled to deduction u/s 80EE.

Interest deduction can be made by eligible individuals up to Rs 1.5 Lakhs in the financial year during which the property is bought under an affordable housing scheme.

This should be the first property for home buyers. In case home buyer already has any other property, either fully or jointly owned on or before the date of sanction of the home loan, they are not eligible for this interest deduction.

If the taxpayer owns the house along with spouse and both are paying home loan EMIs, then both can claim the deduction provided they meet the other terms and conditions.

There are certain conditions with respect to the carpet area of the house property and these have been specified in the memorandum in the finance bill, but not mentioned in section 80EEA:

  • Carpet area should not exceed 60 square meters (645 sq feet) in metropolitan cities of Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai.
  • Carpet area should not exceed 90 square meters (968 sq feet) in any other cities or towns.
  • This definition will be effective for affordable real estate projects approved on or after 1 September 2019.

This deduction on home loan interest is available from the gross total income of the taxpayer.

Also Read: How to download Home Loan interest certificate for tax proofs?

What other tax exemptions / deductions available for home loans?

Here are the list of exemptions / deductions available on home loans.

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1) First time home buyers can avail Rs 1.5 Lakhs home loan interest u/s 80EEA an affordable housing scheme. This is explained in the above article.

2) Individuals can avail Rs 2 Lakhs home loan interest exemption u/s 24 every year on self occupied property. For let-out property, there is no such maximum limit.

3) If you have pre-construction home loan interest, this can be claimed in 5 equal installments up to Rs 2 Lakhs per financial year u/s 24.

4) If there is principal repayment of home loan, you can claim up to Rs 1.5 Lakhs u/s 80C during the financial year.

5) Stamp duty and registration charges can be claimed u/s 80C upto Rs 1.5 Lakhs in the financial year during which it was incurred.

Are you buying your dream home and enjoying these tax benefits in 2021-22?

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Suresh KP

6 comments

  • SB

    Dear Sir,

    I have a query regarding affordable housing benefit U/S 80 EEA. If someone has an inherited property in his name, can he/she buy an affordable house (first home purchase) and claim deduction of additional interest U/S 80 EEA?

    Regards,
    SB

    • Hello SB, There should not be a property on your name to claim this. If your inherited property is converted to your name, you cannot claim this home loan interest deduction

  • Elango A

    If the house is under home loan, for join holding both are Govt. Employee, then what the maximum amount that both can avail for IT deduction under 24(b) and 80c?

    • Hello Elango, If the house is on home loan on joint holding, one can claim their individual benefits i.e. Rs 2 Lakhs home loan interest each u/s 24B and Rs 1.5 Lakhs each u/s 80C.

  • Vishwanath Patil

    Hello Sir,

    My father has given a property to me as a gift deed.

    Can I still avail this deduction as my first home?

    • Hello viswanath, This exemption applies only on the interest paid to bank / financial institution on home loans. Since you not availed any home loan, you are not eligible

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