DEDUCTION UNDER SECTION 80EE
SECTION 80EE ELIGIBILITY :
An individual who has taken a loan from any bank, other financial institute, or housing finance company in respect on the acquisition of residential property is eligible for deduction under section 80EE.
NOTE: – only an individual is eligible to take benefits under this section which means HUF, FIRM, AOP or company or any type of person or taxpayers are not eligible to claim benefits under this section.
SECTION 80EE CONDITIONS :
To avail the benefit of this section the taxpayer must fulfill some conditions. The conditions are as follows
1. The loan should be sanctioned during the financial year 2016-17 i.e. 01.04.2016 to 31.03.2017
2. The value of residential property should be less than or equal to 50 lakhs
3. The loan amount must be less than or equal to 35 lakhs
4. The assessee should not own any residential property as on date of loan sanctioned as this benefit is only for first-time homebuyers
PERIOD TO AVAIL BENEFIT :
If the assesses fulfill all the conditions mentioned above then he can avail the benefit of this deduction till the repayment of the loan continues.
DEDUCTION LIMIT:
RS 50000/- Under section 80EE.
RS 200000/- Under section 24.
Necessary Documents for Claiming Deduction under Section 80EE
Section 80EE of the Income Tax Act provides a valuable deduction for first-time homebuyers. To claim the deduction, it is important to ensure that you have the necessary documents in order. Here is a detailed overview of the documents required for claiming a deduction under Section 80EE:
Home Loan Documents: The foremost requirement is the documentation related to the home loan. This includes the loan agreement, loan statement, and repayment schedule provided by the lender. These documents serve as proof of the home loan taken for the purchase or construction of the property.
Loan Disbursement Proof: It is essential to have proof of the actual disbursement of the loan amount. This can be in the form of bank statements or any document provided by the lender that clearly indicates the disbursed loan amount and the corresponding dates.
Ownership and Property Documents: The documents establishing your ownership of the property are crucial. This includes the sale deed, registered agreement, or any other legal document that confirms your ownership rights over the property.
Completion Certificate: If the property is already constructed, a completion certificate issued by the competent authority is required. This document verifies that the construction of the property has been completed as per the approved plans and regulations.
Occupancy Certificate: In cases where the property is ready for occupancy, an occupancy certificate is necessary. This certificate is issued by the local municipal corporation or development authority, confirming that the property complies with the necessary building and safety regulations.
Interest Payment Documents: To claim the deduction under Section 80EE, it is crucial to have proper documentation of the interest payments made towards the home loan. This includes bank statements or interest certificates provided by the lender, clearly indicating the amount of interest paid and the corresponding financial year.
PAN Card: Your PAN (Permanent Account Number) card is a mandatory document for claiming deductions under Section 80EE. It serves as a unique identifier for income tax purposes and should be provided while filing your tax return.
It is advisable to keep all these documents safe and maintain copies as part of your financial records. These documents not only serve as evidence for claiming the deduction under Section 80EE but also provide essential information for any future transactions or assessments related to the property.
While filing your income tax return, ensure that you accurately report the details of the home loan and interest paid, supported by the relevant documents. This will help you avail the deduction under Section 80EE and reduce your taxable income effectively.
It is important to note that the specific documentation requirements may vary based on individual circumstances and the lender’s policies. Therefore, it is recommended to consult a tax professional or chartered accountant for personalized guidance and advice regarding the necessary documents for claiming a deduction under Section 80EE.
DEDUCTION UNDER SECTION 24
Section 24 of the Income Tax Act is a significant provision that deals with the deductions allowed for income from house property. It outlines the deductions that can be claimed by individuals and businesses on the interest paid on housing loans and the standard deduction for repairs and maintenance expenses.
Under Section 24, there are two sub-sections that determine the deductions available:
Section 24(b): Deduction for Interest on Housing Loan – This sub-section allows individuals and businesses to claim a deduction on the interest paid on loans taken for the purchase, construction, repair, or renovation of a house property. The deduction is available for both self-occupied and let-out properties. However, the maximum deduction allowed for self-occupied properties is capped at ₹2 lacks per financial year, while there is no upper limit for let-out or deemed-to-be-let-out properties.
Section 24(a): Standard Deduction for Repairs and Maintenance – This sub-section allows individuals and businesses to claim a standard deduction of 30% of the net annual value of the house property. The net annual value is calculated by deducting municipal taxes from the gross annual value of the property. This deduction is available irrespective of whether the property is self-occupied or let out.
It’s important to note that the deductions under Section 24 are subject to certain conditions and restrictions. For example, to claim the deduction for interest on a housing loan, the loan must be taken for the purpose of acquisition or construction of the property, and the construction must be completed within a specified time frame. Additionally, the interest deduction for the pre-construction or pre-acquisition period is allowed in five equal installments from the year of completion of construction or acquisition.
In conclusion, Section 24 of the Income Tax Act provides deductions for interest on housing loans and standard deductions for repairs and maintenance expenses related to house property. These deductions play a significant role in reducing taxable income and providing relief to individuals and businesses owning house properties. It is important to understand the specific provisions and conditions mentioned in the section to avail the deductions correctly.