Income Tax: This Home Loan Benefit is Available Only up to 31st March

The individuals buying a home for the first time after 31st March 2022 cannot avail of a deduction of up to Rs 1.5 lakh under Section 80EEA of the Income Tax Act. Budget 2019 proposed that the individuals buying a home on loan in 2019-20 can deduct up to Rs 1.5 lakh on the interest amount paid during the financial year. The taxpayers can claim this deduction and reduce their income tax liability.

Later, the government has extended the benefit of Section 80EEA for the buyers purchasing home up to 31st March 2022. You can avail of the deduction under said section only if the loan is taken from a financial institution and the stamp duty value of the property is Rs 45 lakh or less. Also, the taxpayer should not own any residential property as on the date of sanction of the said home loan.

Budget 2022 has not extended Section 80EEA benefit to the home buyers after 31st March 2022. The home buyers cannot claim such deduction if the home loan is sanctioned after 31st March 2022. However, if you are willing to buy your first home next financial year, you still have a chance to avail of a deduction of up to Rs 1.5 lakh under Section 80EEA.

If your home loan is disbursed in the next financial year, but if you manage to take the sanction letter by 31st March 2022, you can still deduct the interest paid up to Rs 1.5 lakh in the coming financial year, i.e. FY 2022-23, from your taxable income. The benefit of this deduction will be available till the repayment of the loan continues. 

If you satisfy the conditions of both Section 24 and Section 80EEA of the Income Tax Act, you can claim the benefits under both sections. An individual can claim this deduction over and above Rs 2 lakh available under section 24 of the Income Tax Act. 

However, you must exhaust your deductible limit of Rs 2 lakh under Section 24. Then, you can add the additional deduction amount under Section 80EEA.

For any clarifications/feedback on the topic, don’t hesitate to get in touch with the writer at namita.shah@cleartax.in

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