gtag('config', 'UA-154374887-1');

Section 80EEA: Time Limit for Loan Sanction Extended till 31.03.2022

section-80eea-time-limit-for-loan-sanction-extended-till-31.03.2022

Section 80EEA of the Income Tax Act, 1961 (“the Act”) provides for deduction in respect of interest up to Rs. 1,50,000 on loan taken for residential house property from any financial institution subject to the certain specified conditions. One of such conditions is related to sanction of loan for purchasing such an affordable house property within 31.03.2021. In Budget 2021, the period of sanction of loan is extended to 31.03.2022 from the existing date of 31.03.2021.

The deduction under section 80EEA for affordable housings was introduced by Finance (No. 2) Act, 2019 in order to provide an impetus to the ‘Housing for all’ objective of the Government and to enable the home buyer to have low-cost funds at his disposal.


One of the conditions for availing deduction under section 80EEA is that the loan for acquiring the affordable house property is sanctioned by a financial institution during the period beginning on the 1st April, 2019 to 31st March 2021.


Finance Bill, 2021 has extended the end date of loan sanction from 31.03.2021 to 31.03.2022.


While presenting her third Union Budget 2021, Finance Minister Nirmala Sitaraman echoed ‘Housing for All’ and affordable housing as priority areas of the government.



She further stated that in the July 2019 Budget, she provided an additional deduction of interest, amounting to Rs. 1.5 lakh, for loan taken to purchase an affordable house. 


She proposed to extend the eligibility of this deduction by one more year, to 31st March 2022. The additional deduction of Rs. 1.5 lakh shall therefore be available for loans taken up till 31st March 2022, for the purchase of an affordable house.


In order to incentivise the purchase of an affordable house, It is proposed to extend the eligibility period for a claim of the additional deduction for the interest of Rs. 1.5 lakh paid for the loan taken for the purchase of an affordable house to 31st March 2022.


Extension of date of sanction of loan for affordable residential house property-For Buyers


The existing provision of the section 80EEA of the Act, inter alia, provides a deduction in respect of interest on loan taken for a residential house property from any financial institution up to one lakh fifty-thousand rupees subject to the condition that the loan has been sanctioned during the period beginning on 1st April, 2019 and ending on 31st March, 2021. There are further conditions that the stamp duty value of residential house property does not exceed forty-five lakh rupees and the assessee does not own any residential house property on the date of sanction of loan. This provision allows deduction to the first time home buyers, in respect of interest on home loan. In order to help such first time home buyers further, it is proposed to amend the provision of section 80EEA of the Act to extend the outer date for sanction of loan from 31st March 2021 to 31st March 2022.



This amendment will take effect from 1st April, 2022 and will accordingly apply to the assessment year 2022-23 and subsequent assessment years.


For this purpose, amendments have been carried out in section 80EEA of the Income Tax Act, 1961.


Clause 24 of the Finance Bill, 2021 amends section 80EEA in the following manner:


Amendment of section 80EEA.


24. In section 80EEA of the Income-tax Act, in sub-section (3), in clause (i), for the figures “2021”, the figures “2022” shall be substituted with effect from the 1st day of April, 2022.


Amended provisions of section 80EEA explained


Clause 24 of the Bill seeks to amend section 80EEA of the Income-tax Act relating to deduction in respect of interest on loan taken for certain house property.


The said section, inter alia, provides for deduction in respect of interest on loan taken for a residential house property from any financial institution up to one lakh fifty-thousand rupees subject to the condition that the loan has been sanctioned during the period beginning on 1st April, 2019 and ending on 31st March, 2021. This is subject to further condition that the stamp duty value of residential house property does not exceed forty-five lakh rupees and the assessee does not own any residential house property on the date of sanction of loan.


It is proposed to amend sub-section (3) of the said section so as to provide that the deduction under section 80EEA in respect of interest paid on loan sanctioned by a financial institution for the acquisition of a residential house property, shall be available if the loan has been sanctioned during the period beginning on 1st April, 2019 and ending on 31st March, 2022, subject to other conditions specified in the said section.



Get all latest content delivered straight to your inbox
Socialize with Us

Post a comment

0 Comments