Section 80EEA: Tax Benefit for First-Time Home Buyers
- Rashmita Choudhary
- Nov 7
- 9 min read
Section 80EEA of the Income Tax Act, 1961 provides an additional deduction of up to ₹1.5 lakh on home loan interest for first-time home buyers purchasing affordable housing. Introduced through the Finance Act, 2019, it extends beyond Section 24(b) benefits, encouraging residential ownership for middle-income earners. This provision supports the government’s “Housing for All” vision by making home loans more tax-efficient and promoting affordable housing among new buyers.
Table of Contents
What is Section 80EEA?
Section 80EEA of the Income Tax Act, 1961 offers a special tax deduction to first-time home buyers on interest paid for home loans. Introduced through the Finance Act, 2019, this section provides an additional deduction of up to ₹1.5 lakh per financial year on top of the ₹2 lakh deduction available under Section 24(b). The provision was designed to promote affordable housing and support individuals purchasing their first residential property. It applies only to loans sanctioned between April 1, 2019, and March 31, 2022, by recognized financial institutions or housing finance companies.
This deduction is particularly beneficial for middle-income earners who are looking to own their first home under the government’s affordable housing segment. By combining the benefits of Sections 24(b) and 80EEA, taxpayers can enjoy a total deduction of up to ₹3.5 lakh per year on home loan interest, leading to substantial tax savings.
Eligibility Criteria for Claiming Section 80EEA Deduction
To claim benefits under Section 80EEA, certain conditions must be met:
The individual must be a first-time home buyer, not owning any other residential property at the time the loan is sanctioned.
The loan must be sanctioned between April 1, 2019, and March 31, 2022, by a financial institution or housing finance company.
The stamp duty value of the property should not exceed ₹45 lakh.
The property should qualify as affordable housing as per government definitions. In metropolitan cities such as Delhi NCR, Mumbai, Bengaluru, and Chennai, the carpet area should not exceed 60 sq. meters (645 sq. ft.), while in other cities, it can go up to 90 sq. meters (968 sq. ft.).
The deduction is not available if the taxpayer claims benefits under Section 80EE.
Meeting these criteria ensures that the taxpayer can maximize their deduction and comply with all requirements under the law.
Key Features and Limits under Section 80EEA
Section 80EEA provides several notable benefits and conditions that make it unique:
Maximum Deduction: Up to ₹1.5 lakh per year on the interest paid for home loans.
Additional to Section 24(b): Taxpayers can claim both Section 24(b) and 80EEA, making the total deduction up to ₹3.5 lakh annually.
Joint Ownership: If the property is jointly owned and both individuals are co-borrowers, each can claim up to ₹1.5 lakh individually.
Applicable Only to Individuals: The benefit cannot be claimed by companies, HUFs, or other entities.
Focused on Affordable Housing: The intent is to promote home ownership among middle-income individuals through affordable housing projects.
Is Section 80EEA Allowed in the New Tax Regime?
No, Section 80EEA is not available under the new tax regime introduced under Section 115BAC. The new regime offers lower tax rates but disallows most exemptions and deductions, including those for home loan interest under Section 24(b) and Section 80EEA.
Therefore, taxpayers who wish to claim the benefits under Section 80EEA must opt for the old tax regime while filing their income tax returns. For salaried individuals, this decision should be evaluated carefully, as the new regime may still offer benefits in cases with limited deductions. TaxBuddy’s AI-based tax comparison tool can help taxpayers determine which regime results in lower tax liability.
How Section 80EEA Works in the Old Tax Regime
Under the old tax regime, deductions under Section 80EEA are allowed in addition to the ₹2 lakh deduction under Section 24(b) for home loan interest. This means a total of ₹3.5 lakh can be claimed if the interest amount exceeds ₹2 lakh in a financial year.
For example, if an individual pays ₹3.7 lakh in interest on a housing loan during a financial year:
₹2 lakh is deductible under Section 24(b).
The remaining ₹1.5 lakh can be claimed under Section 80EEA.
This reduces the taxpayer’s taxable income by ₹3.5 lakh in that year, resulting in substantial tax savings under the old regime.
Difference Between Section 80EEA and Section 80EE
Criteria | Section 80EEA | Section 80EE |
Maximum Deduction | ₹1,50,000 | ₹50,000 |
Loan Sanction Period | FY 2019-20 to FY 2021-22 | FY 2013-14 to FY 2016-17 |
Property Value Limit | Up to ₹45 lakh | Up to ₹50 lakh |
First-Time Buyer Requirement | Yes | Yes |
Can be Claimed Together | No | No |
Section 80EEA was introduced as a continuation of Section 80EE to extend relief for affordable housing loans sanctioned after FY 2016-17. While Section 80EE offered a smaller deduction limit, Section 80EEA increased the benefit to ₹1.5 lakh, aligning with the government’s affordable housing goals.
Documents Required to Claim Deduction
To claim deduction under Section 80EEA, the following documents should be maintained and furnished when required:
Loan sanction letter from the financial institution or housing finance company.
Interest certificate from the lender showing the interest paid during the year.
Sale deed, possession certificate, or property purchase agreement.
Proof of stamp duty value not exceeding ₹45 lakh.
Ownership and co-borrower documentation if applicable.
Proper documentation ensures smooth verification during tax filing and prevents claim rejections.
Example of Tax Benefit under Section 80EEA
Consider an individual who pays ₹3.7 lakh as interest on a home loan during FY 2024-25.
₹2 lakh is deductible under Section 24(b).
₹1.5 lakh can be claimed under Section 80EEA.
Total deduction = ₹3.5 lakh If the taxpayer’s income falls in the 30% tax bracket, the effective tax saving would be ₹1,05,000 (30% of ₹3.5 lakh). This demonstrates how Section 80EEA significantly reduces tax liability while promoting home ownership.
Policy Objective and Link to PMAY Scheme
Section 80EEA complements the government’s Pradhan Mantri Awas Yojana (PMAY) initiative, which aims to make affordable housing accessible to all citizens. The policy encourages middle-income and first-time home buyers to invest in residential properties by offering direct tax relief on interest payments.
The government introduced this section to stimulate demand in the housing sector, create employment in construction, and move closer to the goal of “Housing for All.” By supporting affordability through tax incentives, Section 80EEA has played a vital role in expanding residential ownership across India.
Latest Updates on Section 80EEA as per Budget 2025
As of Budget 2025, Section 80EEA benefits continue to apply only for loans sanctioned up to March 31, 2022. While no extension has been announced yet, the government is reviewing possible measures to reintroduce similar deductions under new provisions to boost the housing market further.
The Budget also emphasized reforms in housing finance and potential policy frameworks to improve access to affordable home loans. TaxBuddy’s experts anticipate that future fiscal policies may reintroduce extended benefits to keep affordable housing incentives active.
How TaxBuddy Helps You Claim Section 80EEA Deduction
TaxBuddy simplifies the process of claiming deductions under Section 80EEA through its AI-driven filing platform. The system automatically identifies eligible deductions from uploaded documents like Form 16 and loan certificates. TaxBuddy’s team of experts ensures accurate reporting of housing loan details, minimizing the risk of errors or missed claims.
With both self-filing and expert-assisted options, users can choose how they want to file their returns. The guided process, automated validations, and real-time assistance make TaxBuddy one of the most reliable platforms for accurate and timely ITR filing.
Conclusion
Section 80EEA remains one of the most beneficial provisions for first-time home buyers aiming to purchase affordable housing. It enhances overall tax savings, supports home ownership, and aligns with India’s long-term vision of inclusive growth. For taxpayers planning to claim this deduction, choosing the old tax regime and maintaining proper documentation is crucial.
For anyone looking for assistance in tax filing, it is highly recommended to download TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy provides both self-filing and expert-assisted options, ensuring flexibility for every taxpayer. The self-filing plan is designed for individuals who are comfortable managing their own returns using a guided, AI-based platform that auto-fills data from documents such as Form 16 and AIS. For those with multiple income sources, capital gains, or business income, the expert-assisted plan provides end-to-end support — where TaxBuddy’s professionals review the data, ensure compliance, and file the return accurately. This hybrid model allows users to choose the level of assistance based on their tax complexity.
Q2. Which is the best site to file ITR?
The government’s official e-filing portal (incometax.gov.in) remains the statutory platform for all taxpayers. However, many prefer private platforms like TaxBuddy because of their user-friendly interface and automated validation features. TaxBuddy simplifies the process by identifying eligible deductions, checking for errors, and helping taxpayers optimize refunds. It combines technology and expert guidance, making it one of the most reliable and convenient options for filing ITR in India.
Q3. Where to file an income tax return?
An income tax return can be filed directly on the government’s official portal or through registered intermediaries like TaxBuddy. Using TaxBuddy allows taxpayers to avoid manual form entries, as the system auto-extracts and validates income data. The platform offers AI-powered checks, ensures error-free computation, and provides personalized guidance. Whether through self-filing or expert-assisted plans, TaxBuddy ensures timely submission and accurate filing to prevent scrutiny or notice risks.
Q4. Can Section 80EEA be claimed with Section 24(b)?
Yes, Section 80EEA can be claimed along with Section 24(b), provided the interest paid on a home loan exceeds ₹2 lakh in a financial year. Section 24(b) allows a deduction of up to ₹2 lakh on interest paid for self-occupied property. The additional ₹1.5 lakh under Section 80EEA is allowed if the property qualifies as affordable housing and meets other eligibility criteria. This means a taxpayer can claim a combined deduction of up to ₹3.5 lakh, resulting in higher tax savings and greater affordability in home ownership.
Q5. Is Section 80EEA available under the new tax regime?
No, the benefit under Section 80EEA is not available in the new tax regime introduced under Section 115BAC. The new regime offers lower tax rates but disallows several deductions and exemptions, including those for home loan interest. Taxpayers opting for the old regime can continue to claim 80EEA benefits, while those under the new regime must forego these deductions. Therefore, individuals should compare both regimes carefully before filing their return — something TaxBuddy’s AI-assisted comparison tool helps simplify.
Q6. Can joint owners claim this deduction?
Yes, if a home loan is taken jointly, both co-borrowers can claim the deduction under Section 80EEA separately, provided they are co-owners of the property and meet all eligibility requirements individually. Each co-borrower can claim up to ₹1.5 lakh on interest payments made, as long as the loan and property meet the criteria. This allows couples or family members to maximize their overall tax benefit and reduce the total tax liability more effectively.
Q7. What is the property value limit to qualify for Section 80EEA?
To qualify for the deduction under Section 80EEA, the stamp duty value of the residential property must not exceed ₹45 lakh. This limit ensures the deduction benefits buyers of affordable housing. The government introduced this cap to keep the benefit targeted towards middle-income individuals purchasing reasonably priced homes. Taxpayers must ensure the valuation certificate or sale deed confirms the stamp duty value before claiming this deduction in their ITR.
Q8. Can the deduction be claimed if the home loan was sanctioned after March 31, 2022?
No, loans sanctioned after March 31, 2022, are not eligible for the Section 80EEA deduction. The benefit was initially introduced for loans sanctioned between April 1, 2019, and March 31, 2022. Although there have been discussions about extending this period in future budgets, as of now, any loan approved beyond this date does not qualify for the deduction. Taxpayers with later loans may still claim benefits under Section 24(b), but the additional deduction under 80EEA will not apply.
Q9. Is Section 80EEA applicable for under-construction properties?
No, Section 80EEA is applicable only for completed and purchased residential properties, not for under-construction or renovation loans. The deduction can be claimed once the property’s possession is obtained and loan repayments begin. For under-construction properties, the interest paid before possession can be accumulated and claimed later under Section 24(b) in five equal installments, but Section 80EEA does not cover such cases.
Q10. What documents are required to claim Section 80EEA?
To claim deduction under Section 80EEA, the following documents must be maintained:
Loan sanction letter from the financial institution showing the date and approval.
Interest certificate from the lender specifying the total interest paid during the financial year.
Sale deed or possession certificate showing the property’s ownership transfer.
Proof of stamp duty valuation not exceeding ₹45 lakh.
Co-ownership documents if applicable.
Maintaining these documents ensures smooth claim verification during ITR filing and helps avoid notice or rejection during assessment.
Q11. Who can claim Section 80EEA?
Only individual taxpayers who are first-time home buyers can claim the Section 80EEA deduction. The applicant must not own any other residential property at the time of loan sanction. Companies, HUFs, or partnership firms are not eligible for this benefit. The provision targets salaried and self-employed individuals looking to buy affordable housing for the first time. Meeting this “first-home” condition is crucial to ensure eligibility.
Q12. How does TaxBuddy simplify claiming deductions under Section 80EEA?
TaxBuddy makes claiming deductions under Section 80EEA seamless through automation and expert guidance. The platform auto-imports data from Form 16, AIS, and loan certificates to identify eligible deductions. Its AI engine verifies compliance with Section 80EEA’s conditions and alerts users if any criteria are not met. Expert-assisted plans ensure accurate reporting of interest and property details while optimizing total deductions. Whether it’s calculating the combined benefit of Section 24(b) and 80EEA or choosing the right regime, TaxBuddy ensures maximum tax savings with minimal effort.
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