Do you know that one can avail extra tax deduction for home loan interest paid in a financial year beyond Rs 2 lakh under section 24? If not then this article will help you to understand about the new income tax section 80EE, which was launched last year. But unfortunately, the benefit of this section 80EE will not continue this year. I have received a similar question from one of my blog reader and here I am answering the question with my best knowledge.
- 1 Question: Is Section 80EE Deduction on Home Loan Interest of Rs 50,000 extra continue next FY 2017-18 also?
- 2 What is Section 80EE in Income Tax?
- 3 Who can avail tax benefit under section 80EE
- 4 Can the benefit under section 80EE be carry forward to next financial year?
- 5 Need to change in home loan tax benefit calculator?
Question: Is Section 80EE Deduction on Home Loan Interest of Rs 50,000 extra continue next FY 2017-18 also?
Mr. X took a home loan in 2016 to avail the additional income tax benefit of 50,000 under section 80EE, beyond the regular limit of Rs 2 lakh. Now whether he will be able to continue the benefit in the next FY 2017-18 or is there any changes mentioned for section 80EE benefit under Budget 2017.
Let’s answer this question and also explore various rules & benefits of income tax section 80EE. How one can save tax on interest on housing loan deduction for ay 2018-19.
What is Section 80EE in Income Tax?
Section 80EE of income tax act is introduced to provide additional income tax deduction under interest of housing loan on one’s first property purchase. Generally one can get income tax exemption for home loan interest paid every year up to Rs 2 lakh as per section 24 of income tax.
With this reintroduced section 80EE, one can get additional 50,000 deduction after section 24 consumption. This section was reintroduced last year and right now is valid only for FY 2016-17 only.
During budget 2017, there was not a single discussion about this section 80EE. That means this benefits will freeze for that particular year only. After the end of the FY 2016-17 no one can avail tax benefit under section 80EE.
Who can avail tax benefit under section 80EE
There are couple of conditions that one need to fulfill to enjoy tax benefit under section 80EE. Here are the list of such criteria.
- This benefit is only applied for the first time home buyer. For your 2nd home loan, one can’t get this benefit. It is not clear that whether the house has to be self-occupied or not.
- Loan has been sanctioned by a Financial Institution or a Housing Finance Company
- The home loan amount should not be more than 35 lakh.
- The price of the property or flat can’t be more than 50 lakh.
- Applied only for people applied home loan between 1st April 2016 – 31st march 2017 period.
Can the benefit under section 80EE be carry forward to next financial year?
Yes, if you took a home loan to enjoy section 80EE income tax benefit of Rs 50,000, but some how you have declared only for 30,000 amount as your interest of housing might come as 2 lakh 30 thousand. In that case you could have declared Rs 2 lakh under section 24 and Rs 30,000 under section 80EE.
In such a scenario, you can declare the remaining 20,000 deduction under section 80EE next financial year also, even if the benefit will not be applicable for new home loan borrowers.
Need to change in home loan tax benefit calculator?
So, all the home loan tax benefit calculator available online should not consider this section under consideration for people who are taking home loan from next financial year. I hope the answer of this question is clear enough now and one can easily understand how to utilize the section 80EE and get additional tax benefit. You can refer to my other articles on tax saving investment and various tax saving tips for better understanding & tax planning. Please share the article with your friends or family on Facebook, if you find it useful. Thanks for reading and sharing the article. You can also write a comment and share any suggestion or query related to tax planning in India.