Section 80 E of the Income Tax Act:
(Deduction for Education Loan)
Deduction in respect of interest on Loan taken for Higher Education-
Higher education funded with loan can bring some tax benefits
Subject to certain conditions an education loan may entilte you a
deduction u/s 80E for the interest part of loan, if taken
higher education or for higher education of a relative. An indepth
analysis of Section 80E brings out following points that need to be clearly understood:
- Loan must be in your name, may be taken for your child or spouse but shall be in your name.
- Deduction is available for the payment of interest on loan taken for higher education.
- Amount of Deduction: There
is no limit for amount deductible, any amount paid out of taxable
income during the previous year as interest on education loan will be
eligible for deduction U/s 80E.
- What is allowed as Deduction? Deduction is limited only to interest payment part, no deduction is available for principal repayment of loan.
will be available on loan taken for higher education of self, spouse,
children or an student for whom the individual is a legal
guardian. No deduction for dependent brother or sister is available
- Time Period: Deduction
will be allowed for Eight (8) consecutive years or untill the year the
interest is paid in full; whichever is earlier ie. the previous year in
which the payment of interest on loan started and seven years
immediately succeeding the year in which interest payment started
or untill the year the interest is paid in full; whichever is earlier.
be eligible for deduction, loan shall be for higher education. Higher
education means any course of study undertaken with any board, school
or university after passing senior secondary examination(class 12th).
education includes regular courses as well as vocational educational
courses. Higher education may be persuaded in India or abroad.
for higher education must be taken from a financial institution or an
approved charitable institution. Loan from relative or from any other
source is not eligible for the benefit of section 80E.
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