Have you taken an education loan to support higher studies of yourself or of your spouse, Children or for the student of whom you are legal guardian and you are not aware of the Income Tax deduction under Section 80E that you are entitled to. Then here is a guide that will assist you to know Income Tax deduction under Section 80E on education loans. These benefits help you to reduce the overall cost of your education loan.
The deduction under section 80E for Interest on educational loan is available to an individual if following conditions are satisfied:
1. Who is eligible for Section 80E Deduction for educational loan
Section 80E Deduction for educational loan available only to Individual not to HUF or other type of Assessee.
2. Deduction amount under Section 80E
The amount of interest paid is eligible for deduction and moreover there is no cap on the amount to be deducted. You can deduct the entire interest amount from your taxable income. However there is no benefit available on the 3
3. Deduction under Section 80E available on Payment of Interest
Section 80E Deduction available if Interest is been paid during the previous year and was paid out of income chargeable to tax which means if repayment is made from income not chargeable to tax than deduction will not available. Deduction will be allowed only when actual interest is paid.
Note: – Earlier to previous year 2006-07 the Section 80E deduction was available only for Interest on loan taken and repaid by the assessee for his own studies.
4. Interest on educational loan should have been paid on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education. Interest on Loan taken from relatives or friends will not be eligible for deduction under section 80E.
(a) “approved charitable institution” means an institution established for charitable purposes and approved by the prescribed authority section 10(23C), or an institution referred to in section 80G(2)(a);
(b) “financial institution” means a banking company to which the Banking Regulation Act, 1949 applies (including any bank or banking institution referred to in section 51 of that Act); or any other financial institution which the Central Government may, by notification in the Official Gazette, specify in this behalf;
(c) “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;
5. Educational Loan should have been taken for the purpose of pursuing higher studies of Individual , Spouse, Children of Individual or of the student of whom individual is legal Guardian. . Hence parents are also eligible to claim deduction of interest paid by them on loan taken for their children’s education.
Income tax department has added (W.e.f. A.Y. 2010-11) additional fields of studies (including vocational studies) pursued after passing the Senior Secondary Examination or its equivalent from any school, Board or University recognised by the Central or State Government will also be covered under deduction in respect of interest paid on loan taken for higher education.
Definition of Higher education is substituted by making a amendment as per Finance (No. 2) Bill 2009. After the amendment Higher education would means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognised by the Central Government or State Government or local authority or by any other authority authorised by the Central Government or State Government or local authority to do.
So Higher studies include all the fields of study pursued after passing the senior secondary examination or its equivalent exam. It includes both the Vocational courses as well as the regular courses.
6. Interest on educational loan should have been paid for the loan taken for the purpose of pursuing his higher education or of the spouse and children. From A.Y. 2010-11 Relative also includes student for whom the individual is the legal guardian.
7. Deduction period of Section 80E Deduction: – Deduction shall be allowed in computing the total income in respect of the initial assessment year* and seven assessment years immediately succeeding the initial assessment year or until the interest is paid by the assessee in full, whichever is earlier.
The tax benefits on education loan are only valid once you start the repayment and moreover they are only available up to eight years. For instance if your loan tenure exceeds eight years, you cannot claim for deductions beyond eight years. Further if entire payments are done in 5 years only, then tax deduction will be allowed for 5 years and not 8 years.
Hence it is better that the education loan is repaid within eight years. Unless if the loan amount is very high and it is difficult to afford a high amount of equated monthly installment (EMI), one should not opt for education loan with longer tenure.
*Initial assessment year means the assessment year relevant to the previous year, in which the assessee starts paying the interest on the loan.
8. Education Loan should be in the name of Individual: – Deductions on education loan can only be claimed if the loan has been taken in your own name. If your parents, spouse or sibling has taken the loan for your studies, then you are not entitled to get tax benefit.
9. The loan includes not only tuition or college fees but also other incidental expenses for pursuing such studies like hostel charges, transport charges etc.
10. Repayments of education loan NOT covered under Section 80C.
11. There is no condition that the course should be in India.
12. Document required to Claim Deduction under Section 80E– You need to obtain a certificate from your Bank / financial institution or approved charitable institution from whom such education loan is been taken.Such certificate should segregate the principal and interest portion of the education loan paid by you during the financial year. The total interest paid will be allowed as deduction. No Tax benefit is allowed for the principal repayment.
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(republished with amendments )
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i have taken a educational loan, interest has been accrued but not paid,
the effect of accrued interest in balance sheet ? many says that to show in current liabilities to total outstanding with interest and to deduct the interest accrued from capital, whether it is correct ?
Quick question on Section 80E:
Facts of the case:
1) Assessee was not in India for 1 year
2) Educational Loan EMI is still paid
3) No taxable income in India for that year
4) No use of claiming deduction under section 80E
5) Assessee came in India next year and his income is taxable in India accordingly.
Question:
Can he carry forward the interest which he has paid in this year to the next year?
Hi,
I had taken an educational loan from a Nationalised Bank. I didn’t pay the interest or the principal amount for a few years. Nearly 5 lakhs interest was levied on the loan amount. However, now I have cleared the accrued interest amount this year and started paying the EMI. Am I eligible to claim the Income Tax wavier under 80e for the total interest paid this year? Kindly clarify.
Were you able to claim the full interest?
I had taken a loan from a foreign lender (Prodigy Repayments ltd) in 2016 for my abroad education. I started paying the emi from last year. Can i file the interest in 80E. I think this would not be registered with RBI as its a foreign lender.
I have taken education loan for my children, from National Insurance Coy. where I am employee. Can I eligible for deduction u.s.80E
I took my education loan in April 2018. Now I am starting to pay for it. Can I take the exemption for last year accumulated interest also in this year, if I did not take tax benefit last year and no payments were made last year?
Banks gives loan by the name of students. Bank did not issue the sanction letter. If students father and mother pay few installments from their income, both can avail deduction as per their payment or only one person can claim deduction ? What one has to take care while taking the loan from the bank?
IS REBATE UNDER SECTION 80E IS AVAILABLE FOR SERVING INTEREST DURING MORATORIUM PERIOD EVEN WHEN NORMAL EMI HAS NOT STARTED.
My son ,me, jointely taken higher education loan for my son education in us from sbi.now my son is working in us and sending emi amount in our joint saving a/c in same bank from there emi is deducted.can I be eligible for tax benefit under sec 80 e.
I had taken loan for my son. Course completed and joined the company. My question is who can take Tax rebate of education loan interest, (father/son or both).
U/S 80-E, Interest on education loan accrued & due but paid partly and partly is being carried forward.Please advise total interest due is deductable or only interest actually paid is allowable deduction U/s 80-E
I am standing as co-obligant for edn.loan of my son for Rs.4500000/- and remitting interest portion from my salary and my son also remitting amount toward the loan account.whether,i can claim int.concession under 80e
Sir, I am going to take education loan from two firms for my son’s MBA course , one is a employee’s cooperative bank and other in a nationalised bank. I would like to ask that can I have tax deduction under 80E on interest amount on both banks?
Respected sir,
Income tax Education loan sanctioned for Rs.200000/- lakh ( Rs.50000 in 4 instalments) in last instalment issue in 3.7.2009. i
Loan sanctioned in 2006 , The interest is paid monthly to monthly and balance amount closed on 12.09.2017 for Rs.1,57,320/-. The amount of Rs.157320/- ie eligible to Income tax. Please give suggestions. Thanking you.
Sir
Interest paid on Education loan paid by parent for the period 2015-16, 2016-17 and Apr- Aug 2017.
From sep 2017 Son is paying interest.
Both are co-applicants.
Can both of them claim interest for their payment?
Pls Advise.
Hi,
I need to give proof for Educational Loan Interest paid.
Is a letter from the Bank sufficient for the sake of Tax Exemption?
Best Regards,
Immanuel Lawrence.
Sir,
My wife as main applicant & myself & my daughter jointly has taken education loan for my daughter for foreign study from SBI. Now who can get benefit of interest on loan under 80 E
Can I show my sisters education loan interest under my 80E section for tax benefit
What is the procedure for this?
Do I need to contact bank for making me as legal guardian for her.. Because on loan paper my name were not mentioned
My son ,me,and my wife jointely taken higher education loan for my sons education in us from sbi.now my son is working in us and sending emi amount in our joint saving a/c in same bank from there emi is deducted.can me or my wife eligible for tax benefit under sec 80 e.
Reply not received of my question about interest paid for previous years,may I take relief u/s 80E in current year?
I TAKE SCHOLAR LOAN FOR MY 1st SON B.Tech NIT WARANGAL IN 2014 .& NOW I TAKE SCHOLAR LOAN FOR 2nd SON FOR B.TECH IIT KANPUR . IN AUG.2017 . CAN I CLAIM BENEFIT UNDER 80E FOR BOTH LOAN A/C INTEREST IN NEXT AY 2018-19 ?
i took personel loan for sons education abroad in 2010 from sbi .
. i am paying heavilly as emi and interest. purpose in personal loan is education of son in australia. can i fet income tax relief on interest , treating this personal loan as education loan
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Hi,
I did my MBA in the USA, and had taken an education loan from US financial institutions. I have taken the exemption for the last 6 years with 3 different employers. My new employer is declining it saying that the loan has to be from an Indian institution. Please advise.
Thanks a lot in advance.
Sir i have taken education loan in 2009 from SBI n completion of study 2013. But repayment is not yet started, but interest is paid from 2009 to till date.If i start to repay the loan , can i repay it in duration of five years ? Amount required to pay 266000 till today n monthly interest paid 1500 till date from parent account. Kindly tell me.
I have taken a education loan from SBI NIT Rourkela, in july 2012, Now I started repayment. So does amount paid against interest during the FY upto 31st march is 50,000. I don’t wan’t to claim this amount in this FY. Can I claim it in next FY.
FY-financial Year
Can someone clarify if interest repayment towards education loan taken from M/s. Avanse Financial Services eligible for IT rebate u/s 80E? Is Avanse Financial Services, a notified `Financial Institution’ to this effect in the Gazetted issued by Govt. of India?
My employer (Govt. of India) has negated my request for IT rebate stating, Avanse isn’t a gazette notified financial institution. Is that so? Whwn requested, M/s. Avanse, Financial Services have only provided me with certificate of of registration as a financial institution and there’s no mentioning anywhere in it about rebate u/s 80E
hi sir i done mba in 2016 with education loan from canera bank Rs.150000 what is interest rate for me is applicable
If employer provides education loan to employee, whether 80E rebate applicable or not
Dear Sir
I have paid interest Rs. 47789 for AY 2015-16 and received subsidy of Rs. 35000 which falls PY 2012-13. Here, How much should I claim as deduction U/S 80E?
Pls reply me sir
If the student is the borrower and co borrower is the father but mother would repay the loan and interest and the mother wishes to claim 80e deduction ,would it be allowed or would she compulsorily have to be a coborrower?When the bank issues interest statement,would it be required for the mother’s name to appear on the interest statement as co borrower.
Is it important to be a co borrower or important to be the person from whose income the repAyment shall be made.
Kindly answer urgently,there is hardly any time left for applications and visa process .
Thanks in advance
My brother availed education loan of 8 lakhs. We didnt paid anything for 5 years. That 8 lakh become approximately 11,50,000 (including accumulated 3.5 lakh interest). Now will that 3.5 lakh accumulated interest be available for deduction?? If yes, the in how many years can we claim it over a period of years?
Hello,
I had taken an education loan for my higher studies. And, I have been paying the instalments along with the interests. But, I now need to get a provisional certificate as requested by my company HR in order to claim the interest benefit under 80E. On consulting the bank, they gave me the last year statement and regarding the provision loan cert they said it is given for the home loans. Now, I don’t know anything on how and from where to get the same, as the bank customer care said you have to consult the base branch again. Could you please help me out with my problem asap.
Thanks,
Rohit Saraf
Hi Sir,
I have a education loan amount of 2.84 lakhs from July, 2010 from Allahabad Bank. I have completed my study in the May, 2013. I have not paid any interest to bank. Can you please tell me what is the whole amount now for this loan
hi SIr,
i took a load in 2007 for my studies, which is still is going on, so plz let me confirm , is this interest benefit is still applicable or not?..
I am co-borrower to educational loan of my son. Whether I am eligible for deduction under 80E in respect of interest paid from my salary income
Yes you can claim because interest will be charged from the date of issue of loan. Hence interest belongs to that period is allowed.
Sir, I had taken educational loan of Rs 10 lakh from Bank of Maharashtra in the year 2013 in the name of my son with me as co-borrower.I had already paid interest on the loan in full for the last two year and had availed tax rebate also. Now my son has started his job but I will continue to pay the principal as well as interest in the form of EMI from 1.4.2016 onwards for next 5 years. I want to know still I can claim the tax rebate in future also as I am paying the EMI for the entire loan amount
under 80E deduction.
With regards,
Shailendra
Hi sir,
I will be taking an education loan this year for my masters in Germany. I wanted to know how the model of tax exemption will work in case I’m employed there once I’ve completed my studies?
Thanks in advance
Arvind
I have taken education loan of Rs 10,00,000/- from State Bank of Mysore . when I start repayment am I eligible for the total amount repaid or only the Interest component
Sir, i am paying the interest of education loan of my wife but it was taken in her name and in law before our marriage, can i avail tax benefit under 80 E ? please advise
There is a mechanism where bank will take the principle amount first and will take interest amount thereafter. When can I claim rebate in this case? Please guide
can employer deduct interest of education loan from taxable salary if documents are provided or we compulsorily need to file return?
i want to take loan for my daughter’s higher education in Australia, she is already married, can i take income tax benefit?
Sir,
The loan is taken in name of my daughter (who is the student)
with me as co-borrower. If I repay interest, can I claim 80E deduction.
IF Edu loan taken for overseas PG courses for our daughter jointly with daughter, myself and spouse. whether Interest paid by us will be eligible under 80E equally for myself & spouse?
Sir,
The loan is taken in name of my daughter (who is the student) with me as co-borrower. If I repay interest, can I claim 80E deduction.
1.I started repaying the loan this year but not claimed tax benefit on the interest paid. Can I add the interest paid during this year and next year and claim the exemption in the next year’s return?
2. I repaid the loan during this year and closed the loan. Since this is month of march, did not submit the proof in the office. Can I claim this in the next year’s return. (Intention is: I do not want to claim refund from IT dept, I just want to get it adjusted in the TDS done in the next year, in my office itself if possible.)
I also want to know on loan taken for foreign studies
I have taken education loan in my name for my wife’s higher studies. I want to take tax benefit for interest paid against education loan. Which document do I have to show for taking tax benefit and from where I can get that document ?
Thanks
Sharad