The government of India has given several benefits in form of exemptions from taxable income for loans taken for the purchase of a house. These incentives are given mainly under three sections of the Income Tax Act- Section 80EEA, Section 80EE, and Section 24(b). All these provisions have been made to move towards the objective of ‘Housing for All’. This allows borrowers of housing loans to save a decent amount of money while repaying the loan. This being said, Section 80EEA, 80EE, and 24(b) differ, purchase from each other fairly, which we will discuss in this article.
Section 80EE, 80EEA, and 24(b) allows you to claim deductions for interest paid on a home loan.
Section 80EEA, 80EE, and 24(b)
The sections 80 EEA, 80EE, and 24(b) allow home buyers to claim deductions for the interest paid on the home loan. This has made home loans even more affordable so that people from the average income group as well can buy a decent house of their choice. Although the three sections deal with the same things, it is still important to know the key differences between them.
80EEA vs 80EE vs 24(b) – Key Differences
Introduction
Both sections 80EE and 80EEA, one by Finance Act 2016 and the other by Finance Act 2019, have been introduced to deal with deductions of interest from taxable income over and above Section 24(b). Unlike Section 24(b) which allows deduction from the income under house property, Section 80EE and 80EEA allow deductions from the Gross Total Income (GTI). Thus, to claim a deduction under 80EE and 80EEA, the taxpayer must have a positive Gross Total Income.
Loan Date
- To claim a deduction under Section 24(b), the loan has to be sanctioned after 1st April 1999 for purchase or construction of the property.
- You can claim a deduction under Section 80EE if the loan has been taken between 1st April 2016 – 31st March 2017.
- To claim a deduction under Section 80EEA, the loan has to be sanctioned between 1st April 2019 – 31st March 2020.
It is clear from the aforementioned information that each of the succeeding sections was introduced to extend the benefits to claim deductions over the other.
Claim Deduction Amount
- Under Section 24(b), the maximum deduction that a taxpayer can claim is:
Rs 2 lakh in Let Out/Deemed to be Let Out property
Rs 2 lakh in case of Self Occupied House (SOP)
- Under Section 80EE, an individual can claim a maximum interest deduction of Rs 50,000.
- Under Section 80EEA, an individual can claim a maximum deduction of Rs 1,50,000 in addition to the deduction under 24(b). So combinedly, the maximum amount that can be claimed for deduction is Rs 3,50,000.
Now, since both Section 80EE and 80EEA are extensions of the benefits given under Section 24(b), the remaining differences belong only between 80EE and 80EEA. It should also be noted that the main reason behind the introduction of Section 80EEA was to extend the benefits of Section 80EE for low-cost housing as well.
Section 80EE vs Section 80EEA
Value of Property Eligible for Deduction
- To claim deduction under Section 80EE, the value of the property being purchased by the borrower should not exceed Rs 50 lakh and the sanctioned loan amount should not exceed Rs 35 lakh.
- To claim a deduction under Section 80EEA, the stamp duty value of the house for which the loan is taken should not exceed Rs 45 lakh. The loan amount that can be eligible to claim deduction under this section is not specified.
Type and Size of Property
- Under Section 80EE, only first-time buyers are allowed to claim a deduction. Moreover, the benefits of claiming a deduction under this section are only allowed for residential properties.
- Under Section 80EEA, only the individual is allowed to claim a deduction who does not own any other house property. Besides, the carpet area of the house for which the loan is taken should not be more than 60 sqm in metro cities and 90 sqm in other cities of India.
Lock-In Period
There is no lock-in period under both sections. Individuals can keep claiming deductions for as long as the loan goes.
Entities Eligible
Only ‘Individuals’ are eligible to claim a deduction both under Section 80EE and 80EEA. This means AOP, HUF, partnership firms, or any other type of taxpayer are not eligible to claim the benefits of this section.
Hence, we have understood the similarities and differences between Section 80EEA, 80EE, and 24(b) and learned how these tax laws allow several taxpayers to get some relief in the purchase of their house. As is clear from the discussion, it is seen that Section 80EE was introduced to extend the benefits of Section 24(b) and Section 80EEA was introduced to extend the benefits of Section 80EE. So, it is important to check your eligibility before taking a home loan and enjoy the benefits of tax deductions without any worries.
