Section 80E/ 80EE / 80EEA/ 80EEB  Deduction for Interest on Loans

Section 80E Deduction in respect of interest on loan taken for higher education

Section 80E provides deduction to an individual-assessee in respect of any interest on loan paid by him in the previous year out of his income chargeable to tax. The loan must have been taken for the purpose of pursuing his higher education or for the purpose of higher education for spouse, children, and a person for whom the assessee is a legal guardian also loan have been taken from any financial institution or approved charitable institution.

Amount of deduction - The allowed deduction is the total interest of the EMI that one pays during one financial year. However, there is no limit on the maximum deduction amount, but an individual has to get a certificate from his/her bank for the same. This certificate should have separate descriptions of interest and the principal amount of the education loan for that specific financial year. In this way, there will not be any tax benefit for the principal amount; instead, the interest is eligible for the same. 

The deduction under section 80E can be claimed for a maximum of 8 assessment years from the year you start repaying the loan or the interest is fully repaid. In the case where the complete repayment of the loan is done in 5 years only, then tax deduction will be allowed for 5 years and not 8 years.

Conditions - This tax deduction can be availed by individuals only under whose name the loan is taken and is liable to pay the taxes.

Section 80EE  Deduction for Interest on Home Loan

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.

Conditions:

1. The assessee should not own any residential house on the date of sanction of loan
2. Value of house ≤ 50 lakhs
3. Loan should be sanctioned during the P.Y.2016-17
4. Loan sanctioned ≤ 35 lakhs

Amount of deduction - 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.

Section 80EEA Deduction for interest paid on home loan

Under Section 80EEA, first-time home buyers investing in affordable homes in India get Rs 1.50 lakh income tax deductions on home loan interest payment. The benefits of Section 80EEA are applicable only if they buy an affordable property (worth up to Rs 45 lakh) with the help of a home loans. The applicability of Section 80EEA is valid on home loans taken between 1 April 2019 and 31 March 2022.

Amount of deduction - One can get up to Rs 1.50 lakh of deduction under Section 80EEA this deduction can be claimed till the repayment of loan. This is over and above the deduction of Rs 2 lakhs on interest payment under Section 24(b).

 Conditions -

1. The loan sanctioned during the period beginning on the 1st day of April, 2019 and ending on the 31st day of March 2022
2. The stamp duty value of residential house property does not exceed 45 lakh rupees;
3. The assessee does not own any residential house property on the date of sanction of loan.

Note - First-time buyers must know that the those claiming deductions under Section 80EE cannot claim deductions under Section 80EEA. This is specifically mentioned in the law.

Income tax deductions for interest paid on home loan

Section 80EEB Deduction in respect of interest paid on loan taken for the purchase of Electric vehicle

Under section 80EEB An Individual who has taken a loan for purchase of E-Vehicle from any Financial Institution and who has never owned an E-vehicle can avail tax benefit for interest payable on such loans.

Amount of deduction - A deduction for interest payments up to Rs 1,50,000 is available under Section 80EEB. An individual taxpayer may have an electric vehicle for personal use or for business use. In case of business use, an individual can also claim a deduction of up to Rs 1,50,000 under section 80EEB. Any interest payments above Rs 1,50,000 can be claimed as a business expense. To claim as a business expense, it is necessary that the vehicle should be registered in the name of the owner or the business enterprise. 

Conditions

1. The loan must be taken from a financial institution or a non-banking financial company for buying an electric vehicle.
2. The loan must be sanctioned anytime during the period starting from 1 April 2019 till 31 March 2023.

Note :  if an individual opts for the New Tax Regime, the deduction under Section 80E/ 80EE/80EEA /80EEB  will not be claimable