Home Income Tax Section 80E: Deduction for interest paid on Education Loan

Section 80E: Deduction for interest paid on Education Loan

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Section 80E: Deduction for interest paid on Education Loan

The interest paid on the education loan can be claimed as deduction, as per Section 80E of the Income Tax Act of India, 1961.here, you learn in details about eligible assesse, Amount of deduction, condition for claiming deduction.

In this article, you clear about the following question.

  1. Eligible Assessee to claim deduction for Interest paid on Education Loan.
  2. Deduction for What?
  3. Amount of Deduction.
  4. Basic Conditions for claiming Deduction under section 80E

    Eligible Assessee to claim deduction for Interest paid on Education Loan

    Only an Individual can claim deduction under section 80E.Benifits of this section is not available to other category of taxpayer. For example, HUF, Company, AOP, BOI, etc.

    Deduction for What?

    Interest paid on loan taken from any financial institution or any approved charitable institution, for pursuing higher education. You, however, need to obtain a certificate from your Bank. Such certificate should segregate the principal and the interest portion of the education loan paid by you during the financial year.

    Amount of Deduction

    Interest paid on such loan taken, for eight consecutive assessment years beginning from the assessment year in which assessee starts paying the interest on loan, or until the interest is paid in full, whichever is earlier.

    Conditions for Deduction under section 80E

    • Such education must be of assessee himself or any of his relatives (i.e. self, spouse or children)
    • Here, “Relative” means the spouse and children of that individual or the student for whom the individual is the legal guardian.
    • The deduction shall be allowed only for the interest paid on the Education loantaken for higher studies.
    • No deduction is available for Principal Amount of Loan.
    • Payment of interest should be paid out of his income chargeable to tax.
    • The loan should be taken from any Bank / financial institution or any approved charitable institutions.
    • Loans taken from friends or relatives don’t qualify for deduction under section 80E.
    • The Education loan should be taken to pursue higher studies. Whether, in India or outside India.

    Here, Higher education means any course of study pursued after passing the Senior Secondary examination or its equivalent from any school, board or university recognized by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so.

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