Come April 1, homebuyers will not be able to get the additional tax benefit of Rs 1.5 lakh available for affordable housing under Section 80 EEA of the Income Tax Act, 1960. This is because the government has not extended the tax-break for the upcoming financial year 2022-23 in Union Budget 2022. It was available for financial years 2019-2022.
Homebuyers can avail two key deductions under Section 24 (b) and Section 80C of the Income Tax Act. Under Section 24(b), the deduction on the interest component can go up to Rs 2 lakh. Under Section 80C, borrowers can avail a tax benefit of up to Rs 1.5 lakh on the principal amount.
Over and above the Rs 2 lakh deduction under Section 24(b), borrowers are allowed to claim an additional deduction of Rs 1.5 lakh under Section 80EEA for the interest paid on a home loan taken for an affordable house. Hence, an individual can claim a maximum deduction of Rs 3.5 lakh for the interest paid on the housing loan under Section 24 (b) and 80EEA.
Read more:Don’t share Aadhaar, PAN details without valid reasons, CBIC cautions public of GST fraud
However, only those individuals fulfilling certain conditions can avail of this benefit. First, the loan has to be sanctioned between April 1, 2019 and March 31, 2022. Second, the stamp duty value of residence should not go beyond Rs 45 lakh. Third, the individual availing this benefit should not own any other house property on the date of sanction of loan. The loan should be used for purchasing the property and not for repair, maintenance or construction. Only individuals can claim this deduction and not HUFs.
An individual availing a home loan on or before March 31, 2022, can claim this deduction under Section 80EEA, Abhishek Soni, CEO of ITR filing website Tax2win.in, said.
“Once the loan has been sanctioned, then the individual will be able to claim this deduction till the time home loan is fully repaid in the future financial years,” Soni told The Economic Times.
Read more:From filing ITR to updating bank KYC; 6 things you must do before March 31
However, those who want to avail the tax benefit under Section 80 EEA will have to act now. “If you are planning to buy a house that fits into the Section 80 EEA eligibility criteria, get your home loan sanctioned before the deadline expires. You may take the disbursement later on,” Mumbai-based investment and tax expert Balwant Jain told Business Standard.
