What Is Section 80eea Of Income Tax? Explain The Differences Between Section 80ee And 80eea

In the Union Budget of 2019, the Government of India introduced section 80EEA of the income tax act in addition to section 80EE, which first started in 2013-14. Section 80EEA encouraged people of India to buy their first home under an affordable housing scheme per the Government of India’s mandate of “Housing for All.” In addition, it gave them additional yearly savings by providing tax exemptions on the interest part of the home loan, applicable till the loan is over.

What is Section 80EEA?

Only first-time home buyers could avail of section 80EEA tax deductions for up to INR 1.5 Lakhs from the applicable yearly income tax payable by the individual. This section replaced the earlier sec 80 EE of the income tax act, and the benefit amount increased from the previous value of INR 50000. However, the tax exemption is applicable only on the interest amount of the home loan taken from 1st April 2019 to 31st March 2022.

Qualification Terms Under Section 80EEA

An individual has to qualify specific terms for claiming tax benefits under section 80EEA as:

• The individual taking the home loan must be purchasing his first home and should not own or have any prior property in their name.
• The period for sanctioning the home loan should have happened between 1st April 2019 and 31st March 2022.
• The home loan should be only from a financial institute like a housing finance company, bank, or registered non-banking finance company.
• The first-time home buyer should not be getting any sec 80EE income tax benefits as the application of both sections can’t happen simultaneously.
• The property’s stamp duty and registration value should not be more than INR 45 lakhs.
• Only individuals and no Company, HUF, Trust, Association of Persons, etc., can claim tax benefits from this section.
• In cities like Mumbai, Delhi, Kolkata, Bengaluru, Chennai, Gurgaon, Faridabad, Greater Noida, and Hyderabad, the carpet area of the property should be less than 645 sq ft or 60 sq meters.
• In any other smaller city or town, the carpet area should be less than 968 sq ft or 90 sq meters.
• The affordable housing project should have gotten their approval on or after 1st September 2019 to qualify for home loans to avail of this section’s tax benefits.

Characteristics of Section 80EEA

Some characteristics of section 80EEA of the income tax act are:

• Similar to section 80EE income tax exemptions, even section 80EEA tax benefits are applicable for both individuals who apply for a home loan jointly for an affordable housing project and can claim it separately as a deduction from their taxable income.
• An individual buying a house for the first time can claim both section 24B and section 80EEA tax deductions of the income tax act from their yearly taxable income, which are INR 2 lakhs and INR 1.5 lakhs, respectively.
• The buyer doesn’t need to reside in the house to avail of the tax benefit under this section.

Differences between Sec 80EE and 80EEA

Despite the similarities between the two sections of the income tax act, there are a few key differences:

1) Tax Benefits Amount: A first-time home buyer can avail of a tax benefit from section 80EEA for INR 1.5 lakhs, whereas the 80EE benefit is only INR 50000.

2) Qualifying Period: Section 80EE qualifies for three fiscal year periods from 2013-2014, 2014-2015, and 2016-2017. Section 80EEA is applicable from the financial year 2019-2022.

3) Home Loan Amount: The eligibility criteria for Section 80EE rebate applicability is for a home loan amount not more than INR 35 lakhs which isn’t specified for sec 80EEA tax benefit.

4) Valuation Amount of Property: As per sec 80EEA, the valuation amount of the property should not be more than INR 45 lakhs of the total Stamp Duty and Registration costs. According to sec 80EE, the full price of the property must not exceed INR 50 lakhs.

Summary

If you are about to buy a home for the first time, both sec 80EEA and sec 80EE of the income tax act are not currently available. However, if you are an individual who took a first home loan for any affordable housing project during the above specified period, please ensure that you reap the tax rebate benefits they provide. It will guarantee you significant savings and monetary relief.