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80EE vs 80EEA: Know The Difference Between For A Home Loan

Oct 14, 2022
80EE vs 80EEA: Know The Difference Between For A Home Loan

Owning a house in 2022 is no longer troublesome. You don’t have to spend a considerable amount of time considering the various benefits that come along with a home loan. Today, the government has introduced us to plenty of tax-saving schemes and incentives to encourage people to build or own their own space.

Section 80EE and Section 80EEA come under the Income Tax Act and give anyone buying a new home the privilege to claim deductions directly from their net taxable income. Under 80EE and 80EEA, the range of deductions available is between INR 50,000 and INR 1,50,000, respectively. This deduction can only be applied to the interest portion of the home loan EMI.

One crucial piece of information to be aware of is to claim a deduction under 80EE or 80EEA, but not both. 80EE vs 80EEA is a long discussion; let’s examine how they differ.

Section 80EE - Understanding The Scheme

First-time house buyers can claim tax deductions under Section 80EE. The claim is only applicable to the interest amount of the home loan. INR 50,000 is the maximum deduction a loan-taker can claim under this income tax regime for one financial year. This claim can be availed over Section 24 and Section 80C, which are set at a bar of INR 2,00,000 and INR 1,50,000 INR, respectively.

Terms & Conditions For Claiming The Section 80EE Home Loan

Below are the terms and conditions for claiming tax deductions under Section 80EE:

  • For the taxpayer, the home loan should be their first.
  • The deduction is applicable only for the interest paid on the home loan.
  • The loan isn’t provided on commercial properties.
  • The upper cap on the home loan is INR 35 lakh.
  • The value of the house must be INR 50 lakh or less.

Eligibility To Claim The 80EE Tax Deduction

Fitting into specific eligibility criteria is mandatory for homebuyers confirming they can claim the tax deduction under the said section.

  • Under Section 80EE, only individual borrowers can claim deductions on a property they buy single-handedly or jointly.  
  • Section 80EE is not applicable for AOP (Association of Persons), trusts, and HUF (Hindu Unified Families).
  • The taxpayer may or may not live in the property to be eligible for the tax deduction.

Section 80EEA - Understanding The Scheme

This section falls under the objective of “housing for all”, where the government has increased the cap for interest deduction to INR 1,50,000. Therefore, buyers who have purchased a property in FY 2019-20 or FY 2020-21 can claim an 80EEA deduction from their net taxable income.

Terms & Conditions For Claiming The Section 80EEA Home Loan

Below are the terms and conditions for claiming tax deductions under Section 80EEA:

  • One is eligible for the deduction under 80EEA if they are first-time home buyers.
  • Stamp duty on the property should be INR 40 lakh or less.
  • Property in metro cities can’t go beyond a 645 sq. ft. carpet area.
  • The upper limit of the deduction is INR 1,50,000.

Eligibility To Claim The 80EEA Tax Deduction

The eligibility criteria to claim 80EEA are the same as 80EE:

  • It is not mandatory for the taxpayer to live in the property to be eligible for the tax deduction. However, they must not own the residential property.
  • Under Section 80EE, only individual borrowers can claim deductions on a property they buy single-handedly or jointly.
  • Section 80EE is not applicable for AOP (Association of Persons), trusts, and HUF (Hindu Unified Families).
  • The taxpayer can’t claim a deduction under the existing Section 80EE.

Differences Between 80EE And 80EEA

As per law, first-time buyers can’t claim deductions under 80EEA if they have claimed deductions under 80EE.

Here are the highlights of 80EEA vs 80EE:

1. Property Value

  • Section 80EE - The amount can’t exceed INR 50 lakh.
  • Section 80EEA - The amount can’t exceed INR 45 lakh.

2. Loan Amount

  • Section 80EE - One can take a loan up to INR 35 lakh.
  • Section 80EEA - The upper cap on the loan isn’t specified.

3. Maximum Deduction

  • Section 80EE - The allowed deduction is of INR 50,000.
  • Section 80EEA - The allowed deduction is INR 1,50,000.

4. Loan Tenure Applicability

  • Section 80EE - You should have applied for the home loan in FY13-14, FY14-15, and FY16-17.
  • Section 80EEA - The home loan should have been applied in FY20-21 and FY21-22.

Important Terms

While availing of tax deductions, here are some critical terms that one often encounters:

Financial Institution - It is mainly referred to as the lender on which the Banking Regulation Act rules are applicable.

Stamp Duty Value - The value is assessable by the state government or the central government's authority.

Conclusion

Tax deductions are a lesser-known topic that most are yet to explore. The Sections 80EE and 80EEA are part of the income tax regime that many must look into for financial benefits.

While applying for a house loan, especially for first-time buyers, it is helpful if they know how to claim the deductions from Sections 80EE and 80EEA. So, if you have been sitting in the backseat before applying for a home loan, we have got your concerns covered. At Grihashakti, one can get a home loan approval by following simple steps. It starts with checking your eligibility, submitting the documents, and approving the principal amount.

If you have the relevant documents, what are you waiting for? Apply now and start building your dream house!

*Terms and Conditions apply. Loans are disbursed at the discretion of Fullerton Grihashakti.

Fullerton India Home Finance Company Ltd
CIN number: U65922TN2010PLC076972
IRDAI COR No: CA0492

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