Section 80EEA Exemption for interest on home loan with Automated Income Tax Revised Form 16 for F.Y.2020-21

 

Section 80EEAhas been introduced in the July Budget 2019 with the goal of “housing for all”. Government increased the benefit for the financial year 2019-20.

The main purpose of introducing the department is to provide affordable housing finance for every class of common people and to enable the home buyer to keep low cost funds.

In this article, you will find all the features and benefits of this section for Indian Economy.

 Section 80EEA - Before reading the points

Landing U/s80EEA comes with some conditions to get the full benefit of affordable housing finance.

 • Loans were taken from a financial institution or a housing finance company to buy residential home property between 1 April, 2019, 312020 and 1 April, 2019.

 • Only the first time home buyer or applicant has never applied for a home loan or has no residential home in his / her name can avail the benefits of this department

• The actual value of the house (value of stamp duty) should be 45 lakhs or less.

Bengal Applicant if applicable for carpet area of ​​Bangalore, Chennai, Delhi National Capital Region (Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad limited), Hyderabad, Kolkata and the entire city of Mumbai (entire Mumbai metropolitan area)

 • Not much, the carpet area of ​​a non-metropolitan city must not exceed 970 square feet.

Download Automated Income Tax Revised Form 16 Part A&B for the Financial Year 2020-21 with new and old tax regime U/s 115 BAC [This Excel Utility Prepare at a time 50 Employees Form 16 Part A&B]

 Earlier you could save up to Rs 2 lakh on interest on home loan for 24 years.

If you are able to meet the requirements of both Section 24 and Section 80EEA of the Income Tax Act, you can claim benefits under both sections.

 Section 80EE for F.Y 2018-19 or A.Y 2019-20

 For the F.Y2017-2018 or A.Y 2018-2019, first time home buyers can claim an additional tax deduction of up to Rs 50,000 on u / s 80EE in case of interest on home loan. The following criteria must be met in order to claim a tax deduction under section80EE.

 Home Loan FY 2011-17-1. Should have been approved during / after.

Amount should be less than Rs 35 lakh.

House value of the house should not exceed Rs 50 lakhs and

Buy the home buyer should not have any other existing residential home in his name.

Deduction under Section 24 and Section 80EE / 80EEA, the only difference is your possession, Section 80EE / 80EEA does not require possession of your home.

Download Automated Income Tax Revised Form 16 Part A&B and Part B for the Financial Year 2020-21 with new and old tax regime U/s 115 BAC [This Excel Utility Prepare One by One Form 16 Part A&B and Part B]

 Income tax benefits on home loans

 The first income tax benefit on a home loan can be claimed in three parts. The home loan consists of the principal amount and the amount of interest and the EMI is calculated under a specific home loan calculation formula, resulting in higher interest payments and lower prince payments in the early stages and in the middle of your tenure You will have to repay the principal with interest ratio and below.

 Section 80C - Home Principal o Main Payment

 How much principal you have paid is clearly stated in the statement of your home principal account, you need to use section 80, which allows you to pay tax deduction up to Rs 1.5 lakh (maximum) for your principal payment.

 Section 24 - Home Interest Payment of Interest

Payment of interest on house interest up to Rs. 2 lakhs has been exempted under Income Tax Act 24 / B.

Section 80EE - Paying interest on additional homeowners

This section was introduced by 80EE first time buyers to take home loan for the first time, first time home buyers can claim additional tax exemption up to Rs.1.5 lakh.

Download Automated Income Tax Revised Form 16 Part A&B for the Financial Year 2020-21 with new and old tax regime U/s 115 BAC [This Excel Utility Prepare One by One Form 16 Part Part B]

 There are certain criteria for meeting benefits under this section.

Section 80EE introduced from the financial year 2016-17, divided by any 2016 except 2016-17.

 Amount must be less than 35 lakhs.

Home The value of the house is not more than Rs 50 lakh.

Home Lawn applicants never occupy any other residential home in their own name.

New Section 80EEA for F.Y2019-201 F [Y.E 2020-21]

 This section overlaps the 80s and by introducing this section, the interest payment discount limit has been increased to Rs 1.5 lakh.

 This tax benefit will be available from 1 April 2020 (F.Y 2020-21) and until the expiry of the home loan.

Download Automated Income Tax Revised Form 16 Part A&B for the Financial Year 2020-21 with new and old tax regime U/s 115 BAC [This Excel Utility Prepare at a time 100 Employees Form 16 Part A&B]

 Section 24 vs. Section 80EEA

 While both categories are available to the taxpayer for home interest payments, there are a few minor differences that you must be aware of:

 If the applicant is living with the family property or its vacant space or leaving it for rent - in all cases, deduction of up to Rs 2 lakh is applicable.

 Friends also allows you to deduct up to 24 years of age from friends and relatives and the interest paid by them, in the case of Section 80 EEA, only home loans from banks and approved financial institutions.

 In order for you to claim 24/24, you must have possession of your home, on the other hand, Sections 80EE and 80EEA allow you to claim a discount as soon as you start paying the interest you need, without imposing any possession requirement.

 Only a few loan borrowers can get 100 unfit from this category, as there are many hurdles involved. I recommend reading and understanding this section thoroughly and calculating income tax returns for F.Y 2019-2020 [A.Y 2020-2021].

Download Automated Income Tax Revised Form16 Part B for the Financial Year 2020-21 with new and old tax regime U/s 115BAC [This Excel Utility Prepare at a time 50 Employees Form 16 Part B]

 

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Download Automated All in One TDS on Salary for Non-Govt employees for F.Y.2017-18 and A.Y.2018-19 + Home loan tax benefits U/s 80C,24B,80EE

Buying own house is one of the most important goals in everyone’s life. Looking at the rising property prices some purchase it as an investment and many wants to avoid the stay on rent and thus wants to have own accommodation. The increase in housing prices have in turn lead to increase in demand of home loan as very few can afford to buy property on cash/lump sum.

Along with the comfort of paying back the loan in installments home loan comes with lot many tax benefits. Many investors who even can afford to pay in lump sum prefer going through home loan route as the tax benefits reduce the net outflow of interest.

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Understanding home loan tax benefits are very important as one can take multiple advantages from this if used rightly. Understanding income tax benefits of an interest payment under section 24, principal payment under Section 80C, benefits under the joint home loan, second housing loan etc. makes this concept more interesting. 

Before going ahead with the details on Income tax benefits on a home loan, let's first understand the basic terms related to the housing loan:

EMI: Equated Monthly Installment (EMI) is the term used for the monthly payments made for repaying a home loan. EMI has 2 constituents – Principal and interest.  The principal is the portion of loan capital amount and interest is what bank charges for that loan. In the early years of repayment, EMI consist of higher interest portion and lesser principal amount. But as time passes your principal payment increases and interest reduces.

Self-occupied house:  As per Section 23(2) (a), a house property shall be termed as self-occupied property where such property or part thereof: (a) is in occupation of owner for the purpose of self-residence, (b) is not actually let out during the whole or any part of previous year; and (c) no other benefit is derived by the owner.

Deemed to be let out:  If an assessee occupies more than one property, he is allowed to treat only one property as self-occupied at his option. The remaining self-occupied properties shall be treated as “deemed to be let out”.

Joint home loan: A Joint home loan is a loan where there is more than one borrower i.e it is a loan taken jointly by more than one person. A joint home loan can only be availed by a minimum of two and maximum of six applicants. A joint housing loan is given to married couples or close blood relatives like parent and child. Usually, banks insist that all the co-owners of the home must be co-borrowers.

Pre-EMI interest: No EMI payments get started, till the time loan gets fully disbursed. As happens in a home loan with a construction linked plan, no EMI starts till the offer of possession by the builder. The Borrower just has to service the loan interest till then. So the interest amount which has been paid before the starting of EMI called as Pre EMI interest or Pre-construction EMI (which is only the interest part).

The Idea of explaining the above terms is to help you understand the taxation under housing loan in a much better way.

 Home loan Tax benefits u/s 80C

As explained earlier that housing loan EMI consists of Principal and interest. The principal portion of home loan EMI paid in a financial year is eligible for Income tax benefit u/s 80C up to a maximum limit of Rs 1.5 lakh per year. Other Section 80C components for tax saving are PPF, ELSS, Life insurance premiums, NSCs, 5-year bank fixed deposit etc. The total cap of section 80C investment is Rs 1.5 lakh which is inclusive of this principal payment in housing loan.

Home loan tax benefits u/s 24

The interest portion of housing loan EMI paid in a financial year can be claimed as deduction u/s 24 up to a maximum limit of Rs 2 lakh per year. Interest payment is considered as the deduction under the head “income from house property”.

The best part in tax benefit under section 80C and section 24 with respect to housing loan EMI is that there’s no limit on houses and it can be claimed irrespective of the fact the house is self-occupied or let out. Say for example you work in Delhi, but you have one house in Chandigarh and other in Mumbai, for which you are paying housing loan EMIs, You can claim benefit of Section 80C and Section 24 for both of houses under self-occupied category within the maximum limit u/s 80C which is Rs

Say for example you work in Delhi, but you have one house in Chandigarh and other in Mumbai, for which you are paying housing loan EMIs, You can claim benefit of Section 80C and Section 24 for both of houses under self-occupied category within the maximum limit u/s 80C which is Rs  1.5 lakh and u/s 24 which is Rs  2 lakh, combining the total principal and Interest payment of all the houses. Do note that both benefits can be claimed only after taking possession of the house.

Some conditions to avail this benefit:

Maximum interest allowed in aggregate of Rs  2 lakh per year, if the following conditions are satisfied-

a)       The Loan is utilized for construction or acquisition of House on or before 1-4-99.

b)      Construction or acquisition of house should be completed in a maximum of 5 years (w.e.f 1.4.16) starting from the end of financial year in which loan is borrowed.

One more interesting point here is that section 24 tax benefit can be claimed even if the loan is raised from friends, family or relatives. If you have a good inflow of income and then by doing tax planning early in life you can create different tax files in the family and can use them for your own tax benefits. This way you can save on the interest paid to the bank, and also be able to claim tax benefit on your own income.

Do note that this benefit can only be claimed against the certificate issued by the loaner and he has to pay tax on the interest received against this loan. 

 Special tax incentive announced for people taking the first home loan up to Rs 25 lakh in FY 2013-14 (Section 80EE). In this scheme, additional interest deduction of Rs 1 lakh is offered only for one year. If one could not exhaust the full Rs 1 lakh in 2013-14, then he can carry forward the balance to next year. Please note this is over and above the deduction of Rs 1.5 lakh and of course with many additional conditions.

Rules u/s 80EE is being revised every year in Budget. As per the last announcement in budget 2016, Section 80EE allows additional deduction of Rs 50000 per year, over and above Rs 2 lakh u/s 24 on home loan interest portion, provided you satisfy the following conditions:

·         Your Loan should be taken in FY 2016-17

·         Home Loan must be taken from a financial Institution.

·         At the time of sanction of loan, the borrower should not own any other residential property.

·         The Value of property should be Rs 50 lakh or less and the Loan value should be Rs 35 lakh or less.

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