Section 80EE of the Income-tax Act, 1961, allows deductions on the interest component of a home loan. This section allows a deduction of up to Rs 50,000 annually until the loan is fully repaid. Taxpayers can claim the benefit under Section 80EE only if they serviced a home loan between April 1, 2016 and March 31, 2017. In the 2023 Union Budget, the government excluded the deduction on home loan interest when calculating capital gains from house sales.

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What Is Section 80EE?

Section 80EE, introduced in the financial year 2013-14, was initially limited to a maximum of Rs 1 lakh for two financial years. However, it was reintroduced in FY2016-17 (AY 2017-18), allowing up to Rs 50,000 deductions annually until the loan is repaid. The deduction applies to resident and non-resident Indians, and borrowers living in rented houses can also claim it. Individuals can claim the deduction for house purchases jointly or singly. In the case of joint ownership, the deduction will apply only when the person jointly owns the house with a spouse, and both repay the loan. However, this deduction is not available under the new tax regime.

Key Features

This section provides a deduction for individual and joint owners. However, it is not available for Hindu Undivided Family (HUF), Association of People (AOP), or other taxpayers. Section 80EE allows deduction up to Rs 50,000 in a financial year. To claim this deduction, you must not own any other house property on the loan sanction date and choose the old tax regime.

Eligibility For Claiming 80EE Deduction

Anybody paying a home loan is eligible. However, the loan must be sanctioned by a financial institution or a housing finance company and the applicant must not own any other property.

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How To Claim Deduction Under Section 80EE

To claim tax deductions on your housing loan, gather all relevant documents, such as the loan agreement, interest certificate, and proof of principal and interest payments made during the financial year. Determine the maximum deduction allowed under Section 24(b) and Section 80EE of the Income Tax Act for the interest on a home loan for self-occupied property or the entire interest amount if the property is rented out.