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Tax Benefit on Home Loan: Section 24, 80EEA & 80C With Automated Excel Based Income Tax Revised Form 16 Part B for F.Y. 2019-20

The repayment of Home Loan comprises of 2 components i.e. Repayment of Principal and Repayment of Interest. As the repayment comprises of 2 different components , the governed by different sections of the Income claimed as deductions under different sections while filing the Income Income Tax Benefit of Home Loan
The following is the benefit of Home Loan which can be claimed as Deduction:-
Section Deduction allowed Allowed for
Section 24 Rs . 2,00,000 Interest repayment
Section 80C Rs . 1,50,000 Principal repayment
Section 80EEA Rs . 1,50,000 Interest repayment

These Sections under which claimed are explained below:-
Section 80C : Repayment of Principal Amount of Home Loan by an Individual/HUF is allowed as 80C of the Income Income Tax deduction allowed under Section 80C is Rs . 1,50,000.
This 80C and includes amount invested in PPF Account, Deposits , Equity Oriented Mutual funds , National Savings Certificate, Senior Citizens Saving Scheme etc.
This 80C is available on payment basis irrespective of the year for which the payment has been made. The Amount paid as Stamp Duty & Registration Fee is also allowed as 80C even if the Assessee has not taken Loan.

Prepare at a time 100 Employees Excel Based  Revised Form 16 Part B for the Financial Year 2019-2020 & Assessment Year 2020-21 [This Excel Utility Can Prepare at a time 100 employees Form 16 Part B ]

Income Tax Revised Form 16
Income Tax Revised Form 16

However, repayment of principal part of the home loan is allowed only after the construction is complete and the completion certificate has been awarded . No deduction would be allowed under this section for repayment of principal for those years during which the property was under construction.
Moreover, in case you are planning to buy an under-construction property as it is priced at a lower price as compared to a fully completed property, you are here also requested to note that GST is also levied on under-construction Property. However, no Service levied on properties on which construction has been fully completed.
House Property should not be sold within 5 years
Section 80C (5) also states that in case the assessee transfers the house property on which he has claimed 80C before the expiry of 5 years from the end of the Financial Year in which the possession has been obtained by him, then no deduction and 80C . The aggregate amount of claimed in respect of previous years shall be deemed to be the Income of the Assessee of such year in which the property has been sold and the Assessee shall be liable to pay Income Tax benefit on Home Loan (Interest Amount)
claimed as Deduction under Section 24 as well as under the newly inserted section 80EEA ( Amended by Budget 2020)
Section 24: Income Purchase/Construction of Real Estate

Prepare at a time 50 Employees Excel Based  Revised Form 16 Part B for the Financial Year 2019-2020 & Assessment Year 2020-21 [This Excel Utility Can Prepare at a time 50 employees Form 16 Part B ]

Income Tax Revised Form 16

Income Tax Act. As per Section 24, the Income from House Property shall be reduced by the amount of Interest paid on Loan where the loan has been taken for the purpose of Purchase/ Construction/ Repair/ Renewal/ Reconstruction of Property.
The maximum occupied property is subject to a maximum limit of Rs . 2 Lakhs (increased in Budget 2014 from 1.5 Lakhs to Rs . 2 Lakhs ).
In case the property for which the Home Loan has been taken is not self- occupied , no maximum limit has been prescribed in this case and the taxpayer can take occupied by the owner by reason of the fact owing to his employment, business or profession carried on at any other place, he has to reside at that other place not belonging to him, then the amount of Rs . 2 Lakhs only.

Prepare at a time 100 Employees Excel Based  Revised Form 16 Part A&B for the Financial Year 2019-2020 & Assessment Year2020-21 [ This Excel Utility Can Prepare at a time 100 employees Form 16 Part A&B]

Income Tax Revised Form 16
Income Tax Revised Form 16

Section 24 is deductible on payable basis, i.e. on accrual basis. Hence, deduction under Section 24 can be claimed on yearly basis even if no payment has been made during the year as compared to Section 80C which allows for deduction only on payment basis.
Moreover, if the property is not acquired/constructed completed within 5 years from the end of financial year in which the loan was taken, the interest benefit in this case would be reduced from 2 Lakhs to Rs 30 thousand only. (Limit increased from 3 years to 5 years from FY 2016-17 onwards ).
The Quantum of Deduction allowed for payment of Interest on Home Loan under Section 24 has been summarized below:-
Quantum of Deduction allowed for Payment of Interest on Home Loan under Section 24
Type of Property Self Occupied Property Not Self Occupied Property
Completion Status Completed within 5 years Not completed within 5 years Completed within 5 years Not completed within 5 years
Deduction Allowed Rs . 2,00,000 Rs . 30,000 No Limit No Limit
Budget 2017 Update

Prepare at a time 50 Employees Excel Based Revised Form 16 Part A&B for the Financial Year 2019-2020 & Assessment Year 2020-21 [This Excel Utility Can Prepare at a time 50 employees Form 16 Part A&B ]

Income Tax Revised Form 16

In case of non-self occupied property, the interest paid is reduced from the Rent paid to arrive at the Income from House Property. In some cases, it may happen that the Interest paid is more than the Rent earned which will result in Loss from House Property. This Loss is allowed to be set-off with Income from any other head.
The Finance Act 2017 announced on 1st Feb 2017 has put a restriction to the maximum amount of Loss under head House Property that can be set-off from other heads of Income. From Financial Year 2017-18 onwards , Loss of a maximum of Rs . 2 Lakhs is allowed to be set-off with Income from other heads. The amount which is not set-off shall be carried forward to future years.
These new provisions inserted in the Income nicely explained in this link Income Income Tax treatment of Pre -Construction Interest
In many cases, amount is paid for the purchase of property even before the construction is completed. Some home buyers , purchase properties on loan before the completion of construction and start paying EMI to the Bank.
In such cases, Section 24 very specifically states that Repair/ Renewal/ Reconstruction: No Purchase/ Construction: The Interest that has been paid before the completion of construction should be aggregated and the whole aggregated amount shall be allowed as installments for 5 successive Financial Years starting from the year in which the construction has been completed.
For eg : Mr. A purchases a House in New Delhi in 2009 and took a loan of Rs . 10,00,000 from a Bank paying Interest @ 10% p.a. The Construction was completed in April 2011.
Now, As per Section 24 of the Income Income Tax deduction for payment of Interest would only be allowed from financial year 2011-12 onwards . However, the Interest paid on Loan before the completion of Construction (i.e. Rs . 2,00,000) would be allowed as @ 40,000 p.a. commencing from Financial Year 2011-12 onwards . (Easy amounts have been taken in this example for simplification purposes)
Important Points:-
1. Interest paid for outstanding amount is not allowed as Shew Kissan Bhatter v. CIT (1973) 89 ITR 61( SC )
2. This arranging the Loan
4. If the taxpayer is not earning any income from house property, but is paying Municipal Taxes and Int on Home Loan, this would lead to Loss under head Income from House Property. This loss arising under head Income from House Property is allowed to be set-off against income from various other heads in the same Financial Year.
5. In case the loss cannot be set-off against income from other sources in the same financial year, the loss can be carried forward to future years and set-off against income arising from House Property for the next 8 financial years.
6. Benefits of Interest on Home Loan can be claimed only by the person who has acquired or constructed the property with the Borrowed Funds . It is not available to the Successor of the Property.

Prepare One by One Excel Based Revised Form 16 Part B for the Financial Year 2019-2020 & Assessment Year 2020-21 [ This Excel Utility One by One Form 16 Part B ]

Income Tax Revised Form 16

For the purpose of simplicity and easy understanding, a comparison of 80C has been made here under:-
Particulars Section 24 Section 80C
Income Tax Deduction Accrual basis Paid basis
Quantum of Occupied Property: Rs . 2,00,000. Non Self Occupied Property: No Limit Rs . 1,50,000
Purpose of Loan Purchase/ Construction/ Repair/ Renewal/ Reconstruction of a Residential House Property. Purchase / Construction of a new House Property
Eligibility for claiming Purchase/ Construction should be completed within 5 years Nil
Restriction on Sale of Property Nil claimed would be reversed if Property sold within 5 years

Section 80EEA : Income Buyers )
The interest deduction can be claimed under Section 80EEA as well which is over and above the deduction allowed to be claimed under Section 24 of Rs . 2 Lakhs and also above the deduction of Rs . 1.5 Lakhs allowed under Section 80C

Prepare One by One Excel Based Revised Form 16Part A&B and Part B for the Financial Year 2019-2020 & Assessment Year2020-21 [ This Excel Utility One by One Form 16 Part A&B and Part B in One File ]

Income Tax Revised Form 16

This Deduction of Section 80EEA would be applicable only in the following cases:-

1. This deduction would be allowed only if the stamp duty value of the property purchased is less than Rs . 45 Lakhs .
2. The loan should be sanctioned between 1st April 2019 and 31st March 2021.
The above 3 Sections relating to Benefits on Home Loans have been summarised as under:-
Particulars Quantum of Deduction ( Rs .)
Self Occupied Property Non-Self Occupied Property
Section 24 2,00,000 No Limit
Section 80C 1,50,000 1,50,000
Section 80EE 1,50,000 1,50,000
Please Note:-
1. The above deductions are per person and not per Property. So in case you’ ve purchased a property jointly and have taken a joint home loan, each person repaying the amount would be eligible to claim whole deduction separately .
2. If you are living in a rented premise and are taking HRA Allowance, even then you can claim 80EE & Section 80C .
3. In case a person is opting for the New Slab Rates as announced in Budget 2020, they would not be able to claim the benefit of any of these deductions .
For claiming the above deductions , you would be required to furnish the statement provided by the lender clearly indicating the amount payable and paid towards Interest and Principal. After claiming the above deductions of taxed as per the Income Slab Rates. ( Recommended Read: Income Slab Rates)
If you have any more further queries regarding claiming deduction under Section 80C for Principal Repayment or under Section 24 for Principal Repayment .

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