Home loan: You must get an affordable home loan by March 31 to qualify for this tax relief

If you are considering buying an affordable home by taking out a home loan, make sure your loan is sanctioned by March 31, 2022. This is because the additional tax deduction available for affordable housing under Section 80EEA of the Income Tax Act 1961 will not be available from 1 April 2022. The government in its 2022 budget proposal did not extend this available tax relief for the next financial year 2022-23.

Under Section 80EEA, a person is entitled to claim an additional deduction of Rs 1.5 lakh in addition to the deduction of Rs 2 lakh available under Section 24 of the Income Tax Act , for interest paid on a home loan taken out for an affordable home. An individual can claim a maximum deduction of Rs 3.5 lakh for interest paid on the home loan using Sections 24 and 80EEA.

Interest paid up to a total of Rs 3.5 lakh can be deducted from the total gross income of the borrower, thereby reducing his taxable income and, therefore, the tax payable thereon.

The Section 80EEE deduction can be claimed if the following conditions are met:

a) The loan was sanctioned by the lending financial institution during the period between April 1, 2019 and March 31, 2022

b) The stamp duty value of the residential house property must not exceed Rs 45 lakh.

c) An individual must not own residential property on the loan sanction date

Abhishek Soni, CEO of Tax2win.in, an RTI filing website, says, “To claim a deduction under Section 80EEA, a person must ensure that their home loan has been sanctioned on or before the 31 March 2022. Once the loan has been sanctioned, then the individual will be able to claim this deduction until the home loan is fully repaid in future years.”

Soni adds, “The deduction under Section 80EEA can only be claimed for the purchase of residential property. Additionally, this deduction can only be claimed by individual purchasers. HUFs cannot claim this deduction. deduction.”

In accordance with income tax laws, an individual is entitled to two home loan EMI tax relief. There are two components to an EMI home loan – the principal repayment amount and the interest paid. An individual can claim a deduction under Section 80C on the principal amount repaid up to a maximum of Rs 1.5 lakh. A deduction can also be claimed on interest paid under Section 24 for a maximum of Rs 2 lakh in case of independent house.

“If the total amount of interest paid during the financial year exceeds Rs 2 lakh, the person can claim a deduction under Section 80EEA, provided the above 3 conditions are met,” says Soni.