The Government has introduced two new deductions namely deduction for interest on affordable housing loan and deduction for interest on electric vehicle loans for the taxpayers who earned the income during the financial year 2019-20.
Firstly, the deduction for interest on affordable housing loans can be claimed under the newly inserted Section 80EEA of the Income Tax.
Under the objective “Housing for all”, the government has now extended the interest deduction allowed for low-cost housing loans taken during the period between 1 April 2019 and 31 March 2020. Accordingly, a new Section 80EEA has been inserted to allow for an interest deduction from Assessment Year 2020-21.
The existing provisions of Section 80EE allow a deduction up to Rs 50,000 for interest paid by first-time homebuyers for loans sanctioned from a financial institution between 1 April 2016 and 31 March 2017.
With a view to further the benefit and give impetus to the real estate sector, the government has extended the benefit for the Financial Year 2019-20. This deduction can be claimed until you have repaid the housing loan.
Under Section 24, homeowners can claim a deduction for interest payments up to Rs2 lakh on their home loan, if the owner or his family resides in the house property. The deduction of up to Rs 2 Lakh applies even when the house is vacant. If you have rented out the property, the entire home loan interest is allowed as a deduction.
If a taxpayer is able to satisfy the conditions of both Section 24 and Section 80EEA of the Income Tax Act, he may claim the benefits under both the sections. First, exhaust the deductible limit under Section 24, which is Rs.2 lakh.
Then, the taxpayer must go on to claim the additional benefits under Section 80EEA. Therefore, this deduction is in addition to the Rs.2 lakh limit allowed under Section 24.
The benefit of deduction under section 80EEB would be available from Assessment Year 2020-21 and subsequent assessment years till the repayment of loan continues.
One of the significant conditions laid down was that the loan must be sanctioned during the period between April 1, 2019, till March 31, 2023, so as to avail the benefit of the deduction.