Sec 80ee exemption applicability in f.y .14-15

Individual can claim benefit under this section only when all the following conditions are satisfied,

these are-

Purchaser should be first time buyer. i.e. he has never purchased any house and now he is going to purchase a house.

Value of the house should not more than 40 lakh.

Loan taken by Individual for the purpose of buy a house should not be more than 25 lakh.

On the date of sanction of loan individual does not have any own residential house property.

Loan for this purpose taken by individual should be from the Financial Institution or Housing Finance Company.

For this purpose, loan should be santioned in the FinancialYear 13-14

U/s 80EE (4)   - Provides that where a deduction under this section is allowed for any interest payable on loan only when 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.

Quantum of Deduction- Assessee can take deduction u/s 80EE on interest payable on home loan upto 1 Lakh in A.Y.2014-15. It can claim deduction in two assessments year. Means if whole amount of interest payable upto 1 lakh is not claim as deduction in A.Y.2014-15 then remaining balance amount upto 1 lakh can claim in A.Y.2015-16.Total deduction under this section shall not be more than 1 lakh.

Example- Assessee has taken a loan for the purpose of residential house property & interest payable on loan Rs. 90000/- for the A.Y.2014-15.In this case assessee can claim deduction 90000/- in A.Y.2014-15 and other remaining balance i.e. Rs. 10,000/- ,can claim in A.Y.2015-16

Clarification of Section 24 and 80EE-

       Where the property has been acquired, constructed, repaired, renewed or reconstruction with borrowed capital, the amount of any interest payable on such capital is deductible under section 24(b), subject to the prescribed conditions.

     As per Sub Section 4 section 80EE, assessee can avail deduction in respect of interest payable on loan only when assessee does not claim any deduction in respect of such interest in any other provisions of the Act.

     However Finance Bill , 2013 contain an announcement of additional deduction of interest on housing loan for first time buyer state that-

     I propose to allow such home buyers an additional deduction of interest of Rs.100000/- to be claimed in A.Y.2014-15. If the limit is not exhausted, the balance may be claimed in A.Y.2015-16. This deduction will be over and above the deduction of Rs.150000/-allowed for self occupied properties under section 24 of the income tax Act.

So as per above explanation there is clash between Sub section 4 of section 80EE and as per announcement under para 132.So according to me assessee may also claim additional deduction U/s 80EE apart from deduction U/s 24.

Since you are trying to claim exemption u/s 80EE, am presuming that you do not own any other residential property.

S.80EE(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."

So it appears to me that you can claim deduction of upto Rs 1 Lakh for F.Y 14-15

Also note that double deduction is not allowed, so when you will be claiming the interest u/s 24*   , you will be claiming it only for that amount of interest which you have not claimed

*[ The limit of 1.5 Lakh has been increased to Rs. 2 Lakh by Finance (No.2) Act '14]

NOTE THAT INCOME TAX SITE STILL SAYS 1.5 LAKH U/S 24 BUT IF YOU WILL CHECK THE FINANCE ACT THEN THERE(S.10 OF FINANCE (NO.2) ACT 2014] ITS WRITTEN

" In section 24 of the Income-tax Act, in clause (b), in the second proviso, for the
words “one lakh fifty thousand rupees”, the words “two lakh rupees” shall be substituted
with effect from the 1st day of April, 2015."

So effectively maximum amount of interest that can be claimed is [2 Lakhs u/s 24 and ADDITIONAL 1 Lakh u/s 80EE]] totaling 3 Lakh

[NOTE THAT DOUBLE DEDUCTION IS NOT ALLOWED, WHAT THE ASSESSEE IS CLAIMING U/S24 THE SAME CAN NOT BE CLAIMED AGAIN U/S 80EE. BUT HOWEVER IF ASSEESSEE CLAIM ALL THE INTEREST ALLOWED U/S 24 AND STILL THERE IS MORE INTEREST [eg Interest amount being 2.5 Lakh] THEN THIS REMAINING AMOUNT (in excess of what is already claimed u/s 24) CAN BE CLAIMED U/S 80EE, subject to the limits thereof]

For principal payment you can claim deduction u/s 80C [Maximum 1.5 Lakhs]

Explanation to S. 24

Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital borrowed for the period prior to the previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed as deduction under any other provision of this Act, shall be deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years

Other view points are welcomed

Hi

I have purchased my first flat of worth 25 lacs and taken loan of 18lacs from LIC in July 2014.

But i have not got the possession of house till now,possesion of house  is most probably in Aril 2015,i might get the possesion of that flat.I am staying in a rented flat currently and paying 10000 Rs /month .

I am paying a monthly installment of about 15000 (3000(principal)+12000(interset))per month to LIC towards my home loan.But under 80C i cannot show whole amount for tax saving as only i can get exemtion on principle amount only which is only 3000  not on interest part till my house is delivered to me.

Please let me know if i can avail the tax benifit on interst part also under 80EE??

And also illustrate what all i can tax  declare in this scenerio ( Rent,House Loan under 80C and 80EE)???????