Last Chance for First-Time Buyers? What to Expect from Section 80EEA in the 2026 Budget?

Section 80EEA of India’s Income Tax Act provides additional benefit to first-time homebuyers by offering deduction of ₹1.5 lakh per year on home loan interest. This offer extends beyond an already existing tax deduction. This helps first-time homebuyers avail a combined tax deduction benefit, and lowers the entry barrier into real estate.

Owning a home is a dream for many, and for most it almost always begins with a home loan. Rising real estate prices, inflation, and high interest burden on borrowed funds, make it difficult for people to invest in Property in India. This is why home loans have now become a necessity instead of an option.

The government announces schemes and tax deductions on such loans from time to time, to ease the burden. In this article, we will discuss Section 80EEA of India’s Income Tax Act, and what it could mean for first-time homebuyers.

What is Section 80EEA?

Section 80EEA is a new clause under the Income Tax Act of India, that allows an additional deduction of ₹1.5 lakh per year on the interest paid on home loan. This clause is applicable for first-time homebuyers, making a purchase of affordable housing in a limited time frame. This benefit is additional because there already exists a provision, Section 24(b) that allows a deduction of ₹2 lakh on the interest paid on a home loan in a financial year.

Purpose of Section 80EEA

The main purpose of Section 80EEA is to reduce the burden of tax on first-time homebuyers, and make home ownership easy for the common man. 80EEA income tax provision promotes ownership of affordable housing by providing extra tax relief to first-time homebuyers. The government’s “Housing For All” initiative is also supported by Section 80EEA.

Tax Benefits under Section 80EEA

The benefits under this section are an additional cut of Rs. 1.5 lakh per year on home loan interest over an already existing deduction of Rs. 2 lakh per year on home loan interests. This, however, can be availed only under the old tax regime, under certain conditions that will be discussed later on in this article.

Who Can Claim Benefits under Section 80EEA?

Section 80EEA is created to ease the burden of tax on first-time homebuyers. However, this option is not available to everyone who opts for a home loan. You must meet certain eligibility criteria to claim deductions under this section. 80EE income tax eligibility criteria are as listed below:

• Only individuals can claim benefits under this section. Any other taxpayer like HUF, partnership firm, companies, AOP etc cannot claim 80EE income tax deduction.

• The housing loan must have been approved by a bank or housing finance company.

• The loan must be sanctioned between 1st April 2019 and 31st March 2022.

• The stamp duty value of the property must not exceed ₹45 lakh.

• The individual should be a first-time homebuyer and should not own any other residential property at the time the loan is sanctioned.

Comparison of Section 80EE with Section 80EEA

Here is a clear comparison between Section 80EE and Section 80EEA to give you more clarity:

Current Status of Section 80EEA

Section 80EEA was introduced to encourage affordable housing and prompt people into investing in real estate. This was meant to support first-time homebuyers, provided they meet the 80EE income tax eligibility criteria and fit within the 80EE income tax exemption limit.

Deduction under Section 80EEA can be claimed only by those individuals who took a home loan between the period 1 April 2019 and 31 March 2022. There is no extension announced beyond this period, meaning, if you took a loan after 31 March 2022, you will not be eligible for deduction on the interest.

Individuals eligible might be able to claim deduction only if they opt for the old tax regime.

Past Schemes and Budget Provisions for Affordable Housing in India

The government of India has launched several schemes and allocated a budget to make housing affordable for lower and middle-income families, over the years. Some of them are:

• Pradhan Mantri Awas Yojana: PMAY was launched in 2015 to ensure a permanent house for all citizens. It was launched in the pursuit of the goal “Housing for All”. The scheme offered subsidies on home loans, provided financial assistance, and encouraged sustainable construction for economically weaker sections (EWS) and Lower Income Group (LIG). PMAY consists of two components: PMAY-Urban (PMAY-U) for urban middle-class and poor segments, and PMAY-G (PMAY-Gramin) for rural areas.

• Affordable Housing in Partnership (AHP) & Beneficiary-Led Construction (BLC): These are the key sub-components of the Pradhan Mantri Awas Yojana (PMAY). AHP is a supply-side implementation of PMAY in which public or private developers build affordable houses for the EWS families. While BLC is a demand-side implementation where individuals or families build and enhance their own houses with central financial assistance of ₹1.5 lakh per eligible EWS family.

• Credit Linked Subsidy Scheme (CLSS): CLSS is an initiative under the PMAY scheme that subsidised interest on home loans, making housing affordable for EWS (Economically Weaker Section), LIG (Lower Income Group) and MIG (Middle Income Group) families.

What First-Time Homebuyers Can Expect From Section 80EEA in Budget 2026

With the Budget 2026 due in a few days, first-time homebuyers are anticipating whether Section 80EEA would be reformed in a way that could add more value to their investment over already existing ones. They are hoping the government might expand the deduction rate or reinstate it in such a way that would ease interest rates and encourage affordable housing.

Expected Changes in Eligibility or Limits

The government may make major changes in the eligibility criteria like easing the prior home ownership barrier, increasing the property value beyond Rs. 45 lakh, extending the period in which the loan was sanctioned, or maximum deduction allowed on home loan interests. These would be in coherence with the current market trends and would reflect the needs of modern homebuyers.

Impact on Home Loan EMIs and Tax Savings

The revised scheme would lower the cost of borrowing by offering additional tax deductions on home loan repayments. This would help manage the monthly EMIs efficiently.

What Should First-Time Homebuyers Do Now?

Here is a valuable guide to how should first-time homebuyers approach investing in Property in India and real estate in general, so as to leverage the Section 80EEA the best way:

• If you are awaiting a major budget reform, you may lose an existing deal that checks all your boxes, since budget proposals are unpredictable and may not always align with your expectations.

• Buyers should weigh the pros and cons, meaning risks and opportunities. While risks may involve a rise in property prices and interest rates, opportunities may include a favourable budget proposal reiterating affordability, stability and tax deductions.

• Market trends also have a considerable impact on property prices and interest rates. It is of utmost importance to take into account the current market needs and analyse the charts. MoneyTree Realty has a team of best real estate consultants that provide clear guidance and analysis of the market, and help you invest wisely.

• First-time homebuyers should stay updated on legal matters and make sure that the property they are investing in is legally sound. Additionally, they should also make sure that the property is RERA registered.

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Buying your first home can get overwhelming, with all the technical jargons and analysing multiple finance options. But with the right counsel, things can start making sense.

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Conclusion

Section 80EEA has been pivotal in easing the entry-barrier into real estate for first-time homebuyers. With additional tax deductions, it has done enough to encourage investment into residential property in India. While the current scheme limits the eligibility to loans approved between 2019 to 2022, Budget 2026 might relieve this criteria or extend it, further easing home loans and promoting investments.

Whether or not the budget brings these changes, it is important to stay informed and educated on evolving market trends, housing needs, and interest rates, to make financially and legally sound investments.

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