Section 80EE Of The Income Tax Act
Ask a question to an economist, what is the difference between a developed and a developing nation?
The person can give you many reasons but one of the main reason would be to check and compare the GDP growth and you will get a slight idea whether it is going in the ascending or descending order, with the better quality of education, employment, healthcare facilities, food and shelter these factors will help to measure and calculate the growth.
In other words, it’s a way of checking the heartbeat of the economy and work for a purpose to give a better standard of living to the people of any nation.
If you go through the books of taxes and returns you will find that there are three main Income Tax Acts related to the home loan tax benefit:
However, in all the categories the amount of interest is different from one another, therefore in this article, we will only elaborate and discuss section 80EE and see how it changed the lifestyle of a common people.
What is section 80EE?
If you are a taxpayer and you are planning to buy a house as a first-time owner, through section 80EE of the IT Act 1961 you can claim a tax benefit on the amount you pay as the interest on your home loan.
Example: In any year, if you have paid an amount of Rs.3 lakhs you have an additional benefit to claim of Rs.50,000 that too if you are buying a house under section 80EE, therefore, the total amount comes down to 2.5 lakhs in the financial year, however, if you are planning to buy a house under section 24 the tax rebate goes up to 2 lakh and under 80C its 1.5 lakh.
When did Section 80EE Introduced?
It was in the year 2013-14 section 80EE first took a shape and then carried into the next financial year which was 2014-15. However, it was alive for the period of two years where you could take a total tax benefit of up to Rs.1 lakh rupees.
What Is A Financial Year:-
A financial year is a business calendar in which all corporate or individual do their legal and financial transactions and file their returns and taxes with the help of their chartered accountant, in other words you are telling the government that you have earned and spend a particular amount in a year and offer to contribute your participation in the development of the nation in the form of taxes.
What Is The Duration Period Of Financial Year?
It starts from 1 April till the 31st March of every year, in which you can provide your financial data to the government and get the tax rebates accordingly. However, at times, the government choose to extend the date due to the heavy flow of work and strict procedures.
What is the eligibility criteria for section 80EE?
1. First Time Buyer
To apply for a home loan under section 80EE you should be a fresher to buy a property that means no other property should be under your name.
2. The property cost Rs.50 Lakhs Or Less
You need to keep an eye on the amount of the property you buy cause one of the terms is that the cost should not exceed over 50 lakhs.
3. Loan of Rs.35 Lakhs or Less
The loan amount of Rs.35 lakhs or less can only be applied if you are considering to buy a house under 80EE.
4. Loan sanction in the year 2016-17
Make sure to keep in mind that the loan under 80EE should be sanctioned in the year 2016-17 otherwise, you will not be eligible.
5. Available for individual taxpayer only
This is only for individual taxpayer no one from corporate can apply for this section. I suppose that’s why it is one of the best home loans benefit available to an individual who desires to buy their own house.
6. From where you should apply for a home loan?
Home loan providers like banks and financial institutions are the correct mode from where you can take a loan for section 80 EE
What Are The Other Key Features Of 80 EE?
Entities like the Hindu Undivided Family (HUF) and Associates of Persons (AOP) cannot take benefit of this section, it is not mandatory for the buyer to stay in some property he is claiming the tax benefit for, he or she can stay in a rented house and still apply for 80EE, if you are a joint holder the spouse can also take the benefit and claim.
Purpose of 80EE?
Try to observe closely and you will notice that all the government works on the four basic principles that are planning, organizing, implementing and evaluating. As we are the second largest democracy in the world it is the supreme priority of our government to match up with the expectations and the needs of the people.
We are growing second by second, therefore, the extraordinary efforts should come quickly and accurately. However, the section 80EE of the IT Act is a blessing for the upper middle class who wish to buy a dream home for themselves at a reasonable amount of taxable income, no wonder it’s one of the easy home loans and that is the only reason the corporate cannot avail the tax benefit as mentioned in the above.
As an intelligent buyer, you should stay active and aware about what is the market offering you, therefore, invest your funds carefully cause you do not buy a house frequently.