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Deduction For Interest on Home Loan (Section 80EE)

Deduction For Interest on Home Loan (Section 80EE)

Contents

Section 80EE Deduction

Section 80EE deduction provides an additional tax benefit to individuals on interest paid on a home loan for purchase of a residential house property. This deduction is over and above the ₹2,00,000 deduction available under Section 24(b)

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

Period of benefit

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

Quantum 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

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

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Picture of CA Chetnaa Garg

CA Chetnaa Garg

Chartered Accountant with 15+ years of experience in direct taxation, Tax litigation, international taxation, and NRI/foreign taxation matters. Specializes in tax advisory, compliance, audits, and representation before tax authorities, delivering ethical and practical solutions across industries.
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