• Mar
  • 28
  • 2012

Tax Concession on Education Loan u/s. 80E

Section 80E of the Income Tax Act, 1961 provides for a deduction to an assessee (being an individual), out of his income chargeable to tax, on account of any amount paid by him in the previous year by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursing his higher education or for the purpose of higher education of his relative.

Under the earlier provisions, the deduction was available only for pursuing full time studies for any graduate or post-graduate course in engineering, medicine, management or for post-graduate course in applied sciences or pure sciences including mathematics and statistics.

The provisions of the aforesaid section 80E were amended vide the Finance (No. 2) Act, 2009 by substitution clause ( c ) of sub-section (3) so as to extend its scope to cover all fields of studies (including vocational studies) 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.

The above-mentioned tax incentive can be claimed by an individual depending on the amount he/she spends by way of interest on loan for higher education. There is no fund earmarked for this purpose. The expense to the Government is in the form of revenue forgone on account of such claims during a financial year. The revenue forgone during the year 2010-11 on account of deduction under section 80E, as reported in the Receipts Budget 2012-13, is Rs. 138 crores.

This information was given by the Minister of State for Finance, Shri S.S. Palanimanickam in written reply to a question in the Rajya Sabha today.


5 Responses to “Tax Concession on Education Loan u/s. 80E”

  1. RAM SHINDE says:

    I have taken education loan for my son in 2012 I am co-borrower and repaying interest now. After education, my son got job, is it compulsory to pay the loan by him only. I want to repay the loan and avail tax rebate.

  2. ADITYA says:

    i hv taken an education loan in 2010 for my higher studies ,i have not paid any single Rupees to the bank till date . Now i am planning to pay the whole amount with interest in 2014-15 , i want to know that ALL THE INTEREST PAID BY ME IS COMING UNDER TAX SAVINGS SCHEME U/S 80E OR ONLY THE INTEREST OF FINANCIAL YEAR 2014-15.

  3. Govindaraddi Naragund says:

    I took 40,000 rupees loan from vijaya bank for My education.Now i am working in private company .Now i am paying whole amount(amount + interest) once, without EMI. Can i show this amount for tax concession?? Please Reply.

  4. Nidhi Mathew says:

    I have a query regarding S. 80 (e) Exemption under the IT Act. I availed an education loan in 2010 and have started working now. My office has categorized my employment as a “professional” and not as a salaried employee. I want to know whether as a professional fee earner (they pay me a retainer fee) if I can use this deduction. If not, are there any other methods that I can claim a deduction under the IT Act as a professional fee earner. Can I make an application to the regional AO to grant a certificate for exemption of TDS or will I have to file and claim taxes at the end of the financial year.  Thanks.

  5. Paramjeet Singh says:

    Can an employer consider this education loan interest of an employee while calculating his / her salary Income Tax u/s 16. Thanks

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