Can I claim 80EEA after transferring my home loan?

Currently, I can claim a deduction under section 80EEA but my current ROI is high and want to transfer the home loan to a different bank as the initial loan was sanctioned between 2019 and 2022 can I claim a deduction under section 80EEA post transfer to a different bank?

Reply by CA (Dr.) Suresh Surana

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Section 80EEA of the Income Tax Act, 1961 (hereinafter referred to as ‘IT Act’) provides that a taxpayer can claim a deduction of up to Rs 1.5 lakh for interest on a housing loan taken by him/her from any financial institution for the purpose of acquisition of house property, shall be eligible to a deduction against such interest, subject to specified conditions:

The loan should have been sanctioned by the financial institution during the period beginning on the 1st April, 2019 and ending on the 31st March 2022. The stamp duty value of residential house property does not exceed Rs 45 lakh. The taxpayer should not own any residential house property as of the date of sanction of the loan.
 
It is pertinent to note that deduction u/s 80EEA of the IT Act is over and above the deduction available u/s 24b of the IT Act (i.e., Rs 2,00,000/ Rs 30,000 for self-occupied property).

The provisions of the IT Act do not specifically provide for claiming such deduction in cases where a home loan is transferred to a different bank. The transfer of the home loan to a different bank may not affect the eligibility for the Section 80EEA deduction, as long as the loan is still for the same residential property and one continues to fulfil the conditions of the section.

As such, the taxpayer may claim such deduction contending that transferring a home loan to a different bank may not affect the eligibility to claim a deduction under Section 80EEA, as long as the conditions of the section are met and there exists necessary documentation to support the claim.

However, since the Income Tax Act does not provide any clarification on claiming such a deduction, the same may be subject to potential litigation. Thus, the taxpayers should ensure proper documentation from both the original and the new banks regarding the loan transfer and the interest payments made.

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