Under the objective “Housing for all”, the government has now extended the interest deduction allowed for low-cost housing loans taken during the period between 1 April 2019 and 31 March 2020. Accordingly, a new Section 80 EEA has been inserted to allow for an interest deduction from AY 2020-21 (FY 2019-20). The existing provisions of Section 80 EEA allow a deduction up to Rs 50,000 for interest paid by first-time home buyers for loans sanctioned from a financial institution between 1 April 2016 and 31 March 2017. With a view to further the benefit and give impetus to the real estate sector, the government has extended the benefit for FY 2019-20. This deduction can be claimed until you have repaid the housing loan.
A deduction for interest payments up to Rs 1,50,000 is available under Section 80 EEA. This deduction is over and above the deduction of Rs 2 lakh for interest payments available under Section 24 of the Income Tax Act. Read more about the deduction of Rs 2 lakh on interest on a home loan here. Therefore, taxpayers can claim a total deduction of Rs 3.5L for interest on home loans, if they meet the conditions of section 80 EEA.
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