Our Finance minister P. Chindambaram has introduced a new section 80EE in Income tax Act 1961.
Now you can get Extra deduction of rs.1lakh on payment of interest on loan taken for purchasing new residential house property not exceeding rs.40 lakhs and loan sanctioned should not be more than rs.25lakhs and it should be your first house property and should be self occupied.This deduction is one time deduction and over and above the limits of s24b (.i.e over and above rs.1.5lakhs).
Section 80EE is discussed below-:
The following section 80EE shall be inserted after section 80E by the Finance Act, 2013, w.e.f. 1-4-2014 :
Deduction in respect of interest on loan taken for residential house property.
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 of this section, interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential house property.
(2) The deduction under sub-section (1) shall not exceed one lakh rupees and shall be allowed in computing the total income of the individual for the assessment year beginning on the 1st day of April, 2014 and in a case where the interest payable for the previous year relevant to the said assessment year is less than one lakh rupees, the balance amount shall be allowed in the assessment year beginning on the 1st day of April, 2015.
(3) The deduction under sub-section (1) shall be subject to the following conditions, namely:—
(i) the loan has been sanctioned by the financial institution during the period beginning 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 house propertydoes not exceed 25 lakh rupees;
(iii) the value of the residential house property does not exceed 40lakh rupees;
(iv) the assessee does not own any residential house property on the date of sanction of the loan.
(4) Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provisions of the Act for the same or any other assessment year.
(i.e It is one time deduction and, For e.g if you avail deduction of Rs 90,000 in 2013-14, you will be allowed to claim the balance Rs 10,000 in 2014-15.)
(5) For the purposes of this section,—
(a) "financial institution" means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies including any bank or banking institution referred to in section 51 of that Act or a housing finance company;
(b) "housing finance company" means a public company formed or registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes.
Note:
This section allows for additional deduction up to Rs.1 lakh for the A.Y. 2014-15(i.e. FY 2013-14) to individual assesses for interest payable on loan taken for the purchase their residential house property.
This deduction will be over and above the deduction limit of Rs 150,000 allowed for self-occupied properties under section 24b of the Income Tax Act 1961.
Giriraaj Vyas
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