Union Budget 2021-22: Giving a fillip to the buyers of affordable houses, Finance Minister Nirmala Sitharaman has extended the time period of taking loans to buy such houses by one year – i.e. from March 31, 2021 to March 31, 2022 – to avail additional tax benefits of Rs 1.5 lakh u/s 80EEA of the Income Tax Act.
Section 80EEA provides tax benefits up to Rs 1.5 lakh on the interest paid on loans taken for Residential House Property for affordable housing. The benefit is over and above the tax benefit of Rs 2 lakh available u/s 24(B) of the Income Tax Act on interest on Housing Loan on both self-occupied and rented properties.
So, by buying an affordable house, a tax payer may avail tax benefits up to Rs 3.5 on interest paid on home loan taken to buy such a house.
The Maximum deduction allowed under this section is Rs 1,50,000 or interest payable on the home loan, whichever is less and following condition should be satisfied to claim deduction under section 80EEA.
1. Loan is taken for acquisition of Residential Property.
2. Loan has been sanction during the financial year 2019-20, 2020-21 or 2021-22.
3. The Value of house property does not exceed Rs 45 lacs.
4. The assessee does not own any residential house property on the date of sanction of loan.
Also Read: Budget 2021 Income Tax Live Updates
Conditions mentioned in last year’s Finance Bill with respect to the carpet area of the house property in real estate projects approved on or after September 1, 2019 are as follows:
- To be qualified as an affordable house, the carpet area of the house property should not exceed 60 square meter (645 sq ft) in metropolitan cities of Bengaluru, Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region).
- In other cities and towns, the carpet area should not exceed 90 square meter (968 sq ft).