Section 130 — Affordable Housing Loan Interest | ITA 2025

Section 130 — AFFORDABLE HOUSING LOAN INTEREST DEDUCTION (1961 ss. 80EE / 80EEA SUCCESSOR)

Section 130 is the substantive equivalent of 1961 ss. 80EE / 80EEA — ADDITIONAL housing-loan interest deduction OVER AND ABOVE the s. 23 (HP head) ₹ 2 lakh interest cap. Targeted at first-home buyers acquiring affordable residential properties. Up to ₹ 1.5 lakh additional deduction (s. 80EEA limit), subject to: (a) loan from financial institution, sanctioned within prescribed window (typically 1-Apr-2019 to 31-Mar-2022 for s. 80EEA); (b) stamp-duty value of property ≤ ₹ 45 lakh; (c) assessee does NOT own any other residential house. Available ONLY in OLD regime.

Statutory text — Income-tax Act, 2025

Marginal note — Deduction in respect of interest on loan taken for residential house property

(1) An assessee, being an individual, shall be allowed a deduction of i nterest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential house property as per the provisions of this section.

(2) The deduction under sub-section (1) shall not exceed ` 50000 and shall be allowed in computing the total income of the individual for the tax year beginning on the 1st April, 2016 and subsequent tax years.

(3) The deduction under sub-section (1) shall be subject to the following conditions:—

(a) the loan has been sanctioned by the financial institution during the period beginning on the 1st April, 2016 and ending on the 31st March, 2017;

(b) the amount of loan sanctioned for acquisition of the residential house property does not exceed thirty-five lakh rupees;

(c) the value of residential house property does not exceed fifty lakh rupees; and

(d) the assessee does not own any residential house property on the date of sanction of loan.

(4) Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other tax year.

(5) For the purposes of this section,—

(a) “financial institution” means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies, or any bank or banking insti- tution referred to in section 51 of that Act or a housing finance company;

(b) “housing finance company” means a public company formed or registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes.

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 — s. 130	INCOME-TAX ACT, 1961
First-home affordable-housing loan interest	1961 s. 80EE / 80EEA
Up to ₹ 1.5 lakh additional deduction	1961 s. 80EEA(1)
SDV ≤ ₹ 45 lakh + first-home test	1961 s. 80EEA(3)
Cumulative with s. 23 ₹ 2 lakh HP cap → effective ₹ 3.5 lakh first-home interest deduction	1961 s. 80EEA + s. 24

PLANNING NOTES

(i) Sunset provision — verify current eligibility window per Income-tax Rules, 2026. (ii) For first-home buyers, total interest deduction can be ₹ 3.5 lakh (₹ 2 lakh u/s 23 + ₹ 1.5 lakh u/s 130). (iii) SDV-test (₹ 45 lakh): for metro / Tier-1 cities this often disqualifies — verify SDV before factoring in. (iv) Second / third home cannot be CO-OWNED in joint name of assessee at any point — automatic disqualification.

CROSS-REFERENCES

Section 23 — HP head interest deduction (₹ 2 lakh cap).
Section 131 — Other housing loan interest cases.

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