BACKGROUND

Finance minister Nirmala Sitharaman introduced Section 80EEA in the 2019 Union Budget to give a boost to the Centre’s Pradhan Mantri Awas Yojana (PMAY) and further boost real estate sector. The Section 80EEA deduction is over and above the Rs 2 lakh deduction limit allowed under existing provisions of Section 24 (b).

WHO IS ELEIGIBLE?

The deduction under section 80EEA is available only to individuals. No other type of assesee can claim deduction U/s 80EEA. Thus, if you are a HUF, AOP, partnership firm, company, or any other kind of taxpayer, you cannot claim any benefit under this section.

HOW MUCH DEDUCTION IS AVAILABLE?

Maximum amount of deduction available under section 80EEA is Rs. 1,50,000/- per Financial year in respect of interest paid on home loan subject to certain conditions. Deduction U/s 80EEA is in addition to the deduction of upto Rs. 2,00,000/- available u/s 24b.

CONDITIONS FOR CLAIMING DEDUCTIONS U/S 80EEA

1. The loan should be sanctioned during the period 1st April 2019 and 31st March 2022.

2. Stamp duty value of the house property should be Rs 45 lakh or less.

3. The taxpayer should be a first-time home buyer. The taxpayer should not own any residential house property as of the date of sanction of the loan.

4. The individual taxpayer should not be eligible to claim a deduction under the existing Section 80EE

5. The buyer has to take the home loan from a financial institution (banks housing finance companies) and not from family members, relatives or friends.

6. Buyers of residential house property can claim the benefit. It is also specified that the loan must be borrowed for buying the property and not reconstruction, repair, maintenance, etc.

7. If a buyer is claiming deductions under Section 80EE, he cannot claim deductions under Section 80EEA.

8. If Residential Property is located in a metropolitan city, its carpet area should not exceed 645 square foot (sqft) or 60 square metre (sqm) to claim the Section 80EEA benefit. For units in any other city, the carpet area has been limited at 968 sqft or 90 sqm.

9. Cities that are considered metropolitan for this purpose are Bangalore, Chennai, Delhi, Faridabad, Ghaziabad, Greater Noida, Gurgaon, Hyderabad, Kolkata, Mumbai and Noida.