What is Section 80EEA of Income Tax Act? Who is eligible for it? Section 80EEA of the Income Tax Act, 1961, gives a deduction. The deduction was added to the 2019-20 Budget to inspire more human beings to buy their first homes. The deduction can provide vast tax remedies for eligible individuals, making it an appealing option for those who are searching to buy a home. Read the article to get more information about it.
Introduction to Section 80EEA
Section 80EEA of the Profits Tax Act 1961, as revised for the evaluation year 2023-24, is concerned with the 80EEA furnishing the motivation for the primary time to the buyers of the home via supplying the benefits of the income tax.
In accordance with this phase, a man or woman who acquired a loan from a monetary institution for the reason of purchasing or building residential assets might also deduct Rs. 1,50,000 from their taxable earnings, similarly to the deductions authorized by sections 80C, 80CCC, and 80CCD at the interest paid at the loan.
Eligibility Criteria
To avail of this tax exemption on home loan certificates for income tax, you want to satisfy the following Section 80EEA deduction eligibility standards.
- You ought to be a man or woman taxpayer
- You ought to be a first-time home client
- You should finance the belongings purchase with a loan from a housing finance organization or an acknowledged organization.
- The assets’s stamp duty fee has to no longer exceed Rs 45 Lakhs
How is the Deduction Calculated Under Section 80EEA?
Under this section, a cut of Rs. 1.5 lakhs is allowed for interest. The deduction is calculated as follows:
- The deduction is available handiest if the loan amount sanctioned does not exceed Rs. 45 lakhs.
- The deduction is available handiest to people who are first-time home buyers and no longer claim every other deduction for interest paid on home loans under any other segment of the Income Tax Act.
- The deduction is available for most of the 5 years, starting from the year in which the loan was sanctioned.
- The deduction is calculated based totally on the actual interest paid on the home loan at some stage in the monetary year, difficulty to most of Rs. 1.5 lakhs.
Tax Benefits on Home Loans
In the financial year 2022-23, home loan borrowers can claim a deduction of as much as Rs. 2 lakhs on the interest paid on their home loans underneath segment 24(b) of the Income Tax Act. Additionally, first-time home buyers can claim a deduction of as much as Rs. 1.5 lakhs below segment 80EEA.
Conclusion
The individual who buys the home for the first time could get incentives under section 80EEA via supplying income tax blessings. Conditions for eligibility and deductions are allowed under the section. In order to claim this deduction without running into any issues, sufficient documentation and a belongings declaration may be required.