The existing provisions of section 80EEA of the Act provide for a deduction in respect of interest on loan taken from any financial institution for acquisition of an affordable residential house property. The deduction allowed is up to Rs.1,50,000 and is subject to certain conditions. One of the conditions is that loan has been sanctioned by the financial institution during the period from 1st April, 2019 to 31st March, 2020.
The said deduction is aimed to incentivise first time buyers to invest in residential house property whose stamp duty does not exceed Rs.45 lakhs
. In order to continue promoting purchase of affordable housing, the period of sanctioning of loan by the financial institutionis proposed to be extended to 31st March, 2021.
This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years.