Every citizen has a moral and financial obligation to pay taxes. The tax paid by citizens is used by the government to formulate growth, development, and reform initiatives. The government also provides several tax breaks and deductions on different investments, and one such deduction is under Section 80EE of the Income Tax Act of 1961

Since buying a home is considered a significant investment, under section 80EE of the IT Act, 1961, the government allows the deduction of interest payments on home loans. This deduction is allowed only if the buyer is a first-time home buyer; hence this is a limited scheme.

What is Section 80EE?

As per 80EE of the Income Tax Act 1961 first-time homeowners can claim a deduction on the interest amount they pay towards home loan repayment. The buyer or homeowner can deduct a maximum of INR 50,000 from the interest portion of the house loan each financial year. The sum that can be deducted under Section 80EE is in addition to deductions under

  • Section 80C (deductions on different investments up to INR 150,000)
  • Section 24 (deduction of interest on home loan under the heading "Deductions from income from house property," up to 200 000).

What is Section 80EEA?  

The government has increased the amount of interest that can be deducted from low-cost housing loans taken out between April 1, 2019, and March 31, 2022, with the goal of "Housing for everyone."

To permit an interest deduction from Assessment Year 2020–21 (Financial Year 2019-20), a new Section 80EEA has been included. Section 80EE deduction allows first-time homebuyers to deduct up to INR 50,000 of interest paid on loans approved by banking institutions between April 1, 2016, and March 31, 2017.


Eligibility Requirements

Only individuals are eligible for the deduction under section 80EEA. Other taxpaying entities do not qualify for this deduction. Therefore, one is not eligible to claim under this section if they are an AOP, HUF, company, partnership firm, etc.

Deduction Amount

Section 80EEA allows for a deduction for interest payments up to a maximum of INR 150,000. This deduction is in addition to the deduction allowed under Section 24(b) of the Income Tax Act. Under this section, A taxpayer may deduct the interest paid on loan taken out to build, buy, renovate, or fix up an existing residential property. The buyer or homeowner must not be the owner of any other residential property on the date the loan is sanctioned to be eligible for a deduction under Section 80EEA.


  1. A loan must be obtained from a bank or a home financial institution to purchase a residential property.
  2. The loan must be approved between April 1, 2019, and March 31, 2022.
  3. The house property's stamp duty value must not exceed INR 45 lakhs.
  4. A deduction under Section 80EE should not be availed by the individual taxpayer.
  5. The taxpayer needs to be a first-time house owner. As of the day the loan was approved, the taxpayer must not be the owner of any residential property.

Carpet Area Condition

Despite not being referenced in section 80EEA, the following conditions are listed in the memorandum to the finance bill:

The carpet area of the residential property shall be 60 square meters (645 sq. ft) or less in the following metropolitan areas

  1. Chennai
  2. Kolkata
  3. Bengaluru
  4. Hyderabad
  5. Delhi National Capital Region (includes Delhi, Greater Noida, Noida, Gurgaon, Ghaziabad, and Faridabad)
  6. The whole of Mumbai

In any other towns and cities, the carpet area should be 90 square meters (968 sq. ft) or less.

Final takeaway

The purpose of Section 80EEA is to increase the benefits allowed under section 80ee of the income tax act for affordable housing. Previously, Section 80EE was regularly amended to permit a deduction for interest paid on housing loans during the fiscal years 2013–2014, 2014–2015, and 2016–2017. 

Section 80EE has a significant advantage, especially if you have an existing housing loan. In addition, Section 80 EEA increases the tax advantages of interest deductions up to INR 150,000 for home loans taken for affordable housing between April 1, 2019, and March 31, 2020. To qualify for 80EE of the Income Tax Act deduction, the individual taxpayer must be a first-time home buyer.