Section 80EE provides additional deduction in respect of interest on loan taken by an individual for acquisition of residential house property from any financial institution.

The conditions to be satisfied for availing this deduction are as follows –

The benefit of deduction under this section would be available till the repayment of loan continues.

The maximum deduction allowable is 50,000. The deduction of upto 50,000 under section 80EE is over and above the deduction of upto 2,00,000 available under section 24 for interest paid in respect of loan borrowed for acquisition of a self-occupied property

Meaning of certain terms

	Term	Meaning
a.	Financial institution	A banking company to which the Banking Regulation Act, 1949 applies; or Any bank or banking institution referred to in section 51 of the Banking Regulation Act, 1949; or A housing finance company.
b.	Housing finance company	A public company formed or registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes.

ILLUSTRATION
Mr. Shyam purchased a residential house property for self-occupation at a cost of 48 lakh on 1.4.2017, in respect of which he took a housing loan of 35 lakh from Bank of India @11% p.a. on the same date. The loan was sanctioned on 10th March, 2017. Compute the eligible deduction in respect of interest on housing loan for A.Y.2022-23 under the provisions of the Income-tax Act, 1961, assuming that the entire loan was outstanding as on 31.3.2022 and he does not own any other house property.

SOLUTION

Particulars	Amount
Interest deduction for A.Y.2022-23 (i)   Deduction allowable while computing income under the head             “Income from house property” Deduction under section 24(b) ` 3,85,000 [` 35,00,000 × 11%] Restricted to      (ii)  Deduction under Chapter VI-A from Gross Total IncomeDeduction under section 80EE `1,85,000 (` 3,85,000 – ` 2,00,000) Restricted to	2,00,000 50,000