Thinking of claiming a home loan deduction? Get a loan before March 31. Details inside

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New Delhi: In order to enjoy the benefits of the additional tax deduction available for affordable housing under Section 80EEA of the Income Tax Act 1961, individuals should ensure that they take out a home loan before on March 31, 2022. This is because the tax relief didn’t get an extension in the 2022-23 budget and therefore it would not be available from April 1, 2022.
Under Section 80EEA, a person can claim an additional deduction of Rs 1.5 lakh on top of the Rs 2 lakh deduction available under Section 24 of the IT Act, for interest paid on a home loan contracted for an affordable home.

The maximum deduction an individual can avail is Rs 3.5 lakh for interest paid on home loan using Sections 24 and 80EEA.

To claim the above deduction under Section 80EEA, the following conditions must be 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 should not exceed Rs 45 lakh

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

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

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

Income tax laws allow an individual to claim 2 tax breaks on home loan EMIs. The principal repayment amount and the interest paid are the 2 components of an EMI home loan. While an individual can claim a deduction on the former for a maximum of Rs 1.5 lakh, he can claim a deduction for a maximum of Rs 2 lakh in the latter case.

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