Additional Deduction under new Section80EE on Housing Loan Interest w.e.f.01.04.2014.ByShankar BoseInspector of Income-taxMSTU, Puri
Additional Deduction under new Section80EE on Housing Loan Interest w.e.f.01.04.2014.A new section 80EE insert by Finance Bill, 2013 in order to promoteaffordable housing to first time home loan buyers by allowing deduction inrespect of interest on loan taken for purchase of first residential house. Thesaid section 80EE is proposed to be inserted with effect from 1.4.2014 which isas under:80EE. (1) In computing the total income of an assessee, being an individual,there shall be deducted, in accordance with and subject to the provisions ofthis section, interest payable on loan taken by him from any financialinstitution for the purpose of acquisition of a residential house property.(2) The deduction under sub-section (1) shall not exceed one lakh rupees andshall be allowed in computing the total income of the individual for theassessment year beginning on the 1st day of April, 2014 and in a case wherethe interest payable for the previous year relevant to the said assessment yearis less than one lakh rupees, the balance amount shall be allowed in theassessment year beginning on the 1st day of April, 2015.(3) The deduction under sub-section (1) shall be subject to the followingconditions, namely:—(i) the loan has been sanctioned by the financial institution during the periodbeginning on the 1st day of April, 2013 and ending on the 31st day of March,2014;(ii) the amount of loan sanctioned for acquisition of the residential houseproperty does not exceed twenty-five lakh rupees;(iii) the value of the residential house property does not exceed forty lakhrupees;(iv) the assessee does not own any residential house property on the date ofsanction of the loan.
(4) Where a deduction under this section is allowed for any interest referredto in sub-section (1), deduction shall not be allowed in respect of such interestunder any other provisions of the Act for the same or any other assessmentyear.(5) For the purposes of this section,—(a) "financial institution" means a banking company to which the BankingRegulation Act, 1949 applies including any bank or banking institutionreferred to in section 51 of that Act or a housing finance company;(b) "housing finance company" means a public company formed orregistered in India with the main object of carrying on the business ofproviding long-term finance for construction or purchase of houses in Indiafor residential purposes.The proposed amendment provides for deduction to maximum of rupees onelakh on a loan taken for a residential house property; however said deductioncan be availed of only on satisfaction of the conditions provided under sub-section (3).A new section 80EE is proposed to be inserted by the Finance Bill, 2013. Thesaid provision proposes to allow deduction for interest paid on loan taken byindividual assessee from a financial institution in the financial year 2013-14for acquiring residential house property to the extent of rupees one lakh. Thesaid deduction is available subject to conditions being satisfied which areprovided in sub-section (3) to the proposed section. The deduction of thissection can be availed only for the assessment year 2014-15, if in case theinterest paid in the financial year 2013-14 is less than one lakh, in such casesthe assessee is entitled to claim deduction of the balance amount in assessmentyear 2015-16. However, the proposed section provides that if the assesseeavails deduction under this section then such interest portion shall not beallowed under any other provisions of the ActThanks