If you’re buying your first home in India and have taken a home loan, Section 80EEA of the Income Tax Act can help you save money on taxes. Let’s break it down in simple terms.
What is Section 80EEA?
Section 80EEA offers an extra tax deduction of up to ₹1.5 lakh per year on the interest you pay for your home loan. This is in addition to the ₹2 lakh deduction available under Section 24(b). So, if you qualify, you can claim a total deduction of ₹3.5 lakh on your home loan interest.
Who Can Claim This Deduction?
To be eligible for Section 80EEA:
- You must be a first-time homebuyer.
- The home loan should be sanctioned between April 1, 2019, and March 31, 2022.
- The stamp duty value of the property should not exceed ₹45 lakh.
- The loan must be taken from a financial institution or housing finance company.
- You should not have claimed deduction under Section 80EE for the same property.
For How Long Can You Claim?
You can claim this deduction every financial year until you repay the loan, provided you continue to meet the eligibility criteria.
What Documents Are Needed?
To claim the deduction:
- Loan sanction letter from the bank or housing finance company.
- Interest certificate from the lender.
- Property documents showing the stamp duty value.
Example
Imagine you bought your first home for ₹40 lakh in May 2021 and took a home loan. In the financial year 2025-26, you paid ₹2.8 lakh as interest.
- Under Section 24(b), you can claim ₹2 lakh.
- Under Section 80EEA, you can claim the remaining ₹0.8 lakh.
So, your total deduction on interest paid would be ₹2.8 lakh, reducing your taxable income by that amount.
Important Points
- This deduction is only available under the old tax regime.
- You cannot claim both Section 80EE and Section 80EEA for the same property.
- The property can be self-occupied or rented out.
Conclusion
Section 80EEA is a beneficial provision for first-time homebuyers, offering significant tax savings on home loan interest. Ensure you meet the eligibility criteria and have the necessary documents to claim this deduction.
