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 )
Author Bio
i have taken loan from bank of baroda and they are taking interest to my parents on amount during the study is there is no interest on education loan during study?
I am pursuing my MBA in Sikkim manipal university.I have not taken any loan for this and for me income tax deduction is happening as TDS. Can I get any incometax relief for the amount paid for this ?? I
Hi Hasan, i can understnd d logic behind ur question bt imp thnk is ur going to get the benefit in the form of Sec.80E to the extent u lose in the form of Interest.
Hence, i request you to pay in lumpsum n close the loan within 2yrs and make investment in some other investments under which u can get deduction U/sec.80C and can expect sme knd of appreciation in tht investment over a period of time.
hello sir i wanna do b.tech but my father is not unable to give my fee nd my father taking education loan pls advise me which bank or instiute or trust in alwar rajasthan is better for education loan pls rply
Hi TaxGuru,
I have taken an educational loan whose repayment starts from my getting a job. I am emplyed at the moment and have the means to repay the amount in 1-2 years. But, uner the loan terms I may extend the payment to 5 years.
My question is: Which is be more cost effcient for me:
(1) Repay the loan amount in 1-2 years by making lump sum payments.
(2) Stretch it to 5 years so that the benefit u/s. 80E can be availed as the only difference in repaying in 2 yrs and 5 yrs is the interest factor. Since, that is subject to deduction u/s. 80E, why to spend the lump sum?
Any help would be highly appreciated.
Thanks in advance.
I the Mr.Anand who have taken the loan in 2004 end. My course duration was from 2004-2008. I had taken the amount 88,000 from union bank. now with interest it is raised to 1,20,000.we have not paid the amount as we supposed to pay it from last year itself .
sir, i think now the interest is 32,000.any reduction can happen by any govt. rule as I heard that central govt is made a scheme that only principal amount to be paid, interest is not suppose to pay. is it? pls give me the idea about it. please, i would like to know it.
thank you sir,
hope you reply with some suggestions.
hi,
Sir I took education load for my B’Arch degree at IIT Kharagpur from PNB in 2007 now I am in my 5th year (final yr)
I have just a rough idea about the deduction in interest of loan.
I went to the PNB iit kharagpur branch also, but the official told me that no such thing has been finalised by govt. and whatever you have heard about the deduction thing is purely a rumour.
Sir, I request you to kindly guide me how should i proceed through a proper channel so as to get the benefit by this ammendment in act.
The education loan is in my name and it is around 3.5 lacs.
thankin you,
regards,
gaurav uniyal.
Hi,
I’m paying the tutuion fees for my brother who is dependent on me as my father is no more & I’m also bachelor.
How can I claim these amount as taxable?
Regards
Sekh
My son, is going to manila for his MBA at AIMS.
total cost of education fees and other expenses is usd 36000 about 17.00 lac.
If we avail educational loan from bank than scheme is
@ 11% pay interest first 2 years and than for 5 yrs pay EMI of about 24000/month which covers principle and interest.
Loan will be given on anme of my son only.
My office CA said that i can avail befit of total interest paid of 2 yrs i.e. 110,000 x 2 = 220,000 and further 5 years all interest.
From April 2010 my salary is increased from 900,000 to 12,60,000 per anum. I avail full beneifits under LIC, housing loans and Mediclaim. Can this educational loan taken be taken advantage as well?
I have 12 lacs ready for paying the fees. i can put this as colateral security and take bank loan. PLEASE CHECK N CONFIRM IF ITS RIGHT THING TO DO? As a father will i be able to claim total interest benefit.
I am a retired person. I am co-borrower of education loan (from SBI)taken by my son in June 2008 for study of full time MBA. He completed the course in April 2010 and got a job in May. He has started repayment of loan from June 2010. Kindly advise whether my son would be eligible for benifit under section 80E for income tax computing purpose and upto what maximum amount. Regards
Hi,
i am planning to apply as co-applicant for my brother higher education loan and pay monthly interest as EMI.
Please let me know if i am eligible for availing tax benefit?
Regards
Niranjan
want to know how can i find the balance of the loan amount on the internet.. please guide me…
MAY BOSS HAS TAKEN A EDUCATIONAL LOAN IN THE NAME OF HERSELF AND HER DAUGHTHER FOR HIGHER STUDIES IN ABROAD. MY BOSS IS REPAYING THE LOAN INSTALLMENT. WHTHER SHE CAN TAKE THE SET OFF OF INTEREST ON LOAN OR NOT.
I want to take a loan for studies for my sister. It falls under the Vocational studies category. will i get a tax exemption for that under section 80E.?
i have taken education loan before my marriage,is my husband is elligible for tax deduction
hii gentlemen..i hv finished B.tech recently..i had taken 2.5 lac education loan in 4 installments,one in each yr of Btech for college tution fee..(i had not taken 2.5lac at a time).i hv not paid any money on interest head.accoding to bank rule , i will hv to payback from november 2011.i belong to SC/ST category..so wat are the taxation befits i can claim,and wat is the procedure of claiming deductions…is it possible to ask for the complete relaxation from he interest …can i get deduction from my monthly tax ammount>??/
hello sir ……. i have taken loan in june 2009. this loan senssion for (2009-2010) mba course .Is i come in this scheme.if i will come in this scheme then tell me sir …………..
HI TAX GURU
I HAVE TAKEN LOAN FOR RS. 18,00,000/- FOR HIGHER STUDIES IN USA IN THE YEAR 2005, MY FATHER HAS STARTED REPAYMENT FROM 2007-2008 THE INTERST AMOUNT FOR RS. 2,23,000/- FOR THE YEAR 2008-2009 AND 2009-2010 FOR RS 1,81,000/-
NOW I CAN EXEMPT THE TOTAL INEREST PAID OR WHAT IS LIMIT FOR U/S 84E
KIDNLY ADVICE ME
Dear Sir,
I took education loan for PG (2007-09).
In FY 2009-10, I paid the outstanding interest (interest charged till Jan 2010)= 70000 Rs.
Am I eligible for tax benefit on
1. Interest Paid = 70000 Rs
or,
2. Interest charged by bank from april 2009 to march 2010 = 30000 Rs?
Kindly clarify & quote the source (IT dept) if any.
Thanks a lot
Dear sir
I have taken education loan for B.tech course(2004-2008)from a gramin bank.I got the job now only.Total due now reaches near to 3 lakh.can I claim for any interest.If possible where i have to approach
Dear Sandeep Ji,
I got my education loan disbursed by SBI in May 2009 for my MBA abroad. Though I was studying from June 2009 , I also regularly serviced the simple interest portion. As of today the principal amount remains the same as in May 2009 because of this regular payment.
1. Is Sec 80E exemption applicable to the simple interest portion that I paid in 2009-10.If so can I claim that when I file returns for fin yr 2009-10? I completed my studies in May 2010 and my EMI will start from June 2010.
Thanks Sir.
Hi all,
Some of My friends want to give some donation from USA, UK & Ukaine to India a Temple having 80g & Fcra.
How much exemption they are going to get…. Can anybody help me to solve my query of Friends.
Thnks.
can I claimed both Int & repayment of loan for 80E
please guide
Hi, I have taken education loan from 2008 to 2011. What documents are required to be submitted for claiming tax exemption on the interest rate I pay?
Hi,
I have taken education loan from 2006 to 2009 for my pg course and during my studies my father used to pay interest amount.Now i got the job and my loan is 3.5 lakhs and i want to pay installment 20 k per month then how to declare this in it declaration…..pls help me…..
Hi, I have taken education loan now I am paying my loan as early as possible so how much amount can I show in my investments, and can I show my whole EMI in the declaration or I can only show the interest which I m paying.
hi, my bank SBMysore, says that i can get a 1% rebate on the interest of my education loan if i pay my interest regularly in the moratorium period.is this rebate applicable to the interest money i have paid during the moratorium period or does it apply to the interest during repayment of loan??? thanks
I have taken loan for my son for study in Canada for the course of Chmical Lab Technician this is diploma course and course duration is for two years. the loan is deducting from my salary of SBI. Loan has been sanctioned by HDFC Bank and in sanction letter name of applicant is shown of my son’s name and my name is as a co-applicant can I avail the benefit of Interest component under Section 80E ? Pl comply
Thanking you
J B Trivedi
I have taken loan for my son for study in Canada for the course of Chmical Lab Technician this is diploma course and course duration is for two years. the loan is deducting from my salary of SBI. Loan has been sanctioned by HDFC Bank and in sanction letter name of applicant is shown of my son’s name and my name is as a co-applicant can I avail the benefit of Interest component under Section 80E ? Pl comply
Thanking you
J B Trivedi
I have taken a loan from Citi bank in U.S. for studies in U.S. Does s 80E apply in this case. In response to one of the queries in an earlier post you have responded that s 80 E applies. Why is it so? Is citi bank, U.S. part of the definition of ‘financial institution’ as envisaged in s 80E or is there any court ruling in this regard.
My employer does not consider this to be covered u/s 80E and hence they deduct tax at source not considering this exemption. Pl back it up with sound reasoning.
Dear Sir,
I really appreciate for the answers you have provided to the community.
I have one question for you
I have taken educational loan from State Bank of India for my Master’s degree in overseas in 2006. I have paid above 6lakhs towards my interest and I had started paying since 2 years from Australia, however I am working in Australia and the loan is in my name and my Dad is the guarator
1.Do I or my Dad qualifies for the deduction of interest under 80E? If he cannot claim can I claim for it if I am working overseas? – I just have a doubt if you can give me some clairifications on that?
Many thanks for your support
Kavya
Dear Sir,
I really appreciate for the answers you have provided to the community.
I have one question for you
I have taken educational loan from State Bank of India for my Master’s degree in overseas in 2006. I have paid above 6lakhs towards my interest and I had started paying since 2 years from Australia, however I am working in Australia and the loan is in my name and my Dad is the guarator
1.Do I or my Dad qualifies for the deduction of interest under 80E? If he cannot claim can I claim for it if I am working overseas? – I just have a doubt if you can give me some clairifications on that?
Many thanks for your support
Kavya
Hi i am doing CPA, is it considered as full time or part time, since it is a costly course and professional one can I get int benefit u/s 80E?
ashok
Thanks Mr sandeep kanoi for conveying and confirming me to claim tax exemptions from gross income from my employer for interest paid by me.
once again for the quick response
asha malhotra
s s kushwaha
sir my dauther is studing in B.E. i taken a eduction loan from bank what i can claim interest under section 80E
Before marriage my wife taken educational loan .She is not doing any job and i am paying the monthly EMI . Is am eligible exemption under section 80E ? . What should it required for eligibility under section 80E ?
my son has taken loan for around 12 lacs and my self asha malhotra (mother) is co-applicant and I have been paying interest on this loan since april 2009 till date .
can I take tax exemptions on this interest paid till date from my employer from gross income.
pl reply soon as the date for tax is approching fast and I need to convey my employer to provide me exemption under section 80E.
Read more: https://www.taxguru.in/income-tax/deduction-under-section-80e-for-interest-on-education-loan-taken-for-self-and-relatives.html#ixzz0gkK48BVg
sir ihave taken education loan 110000 i have paid 85000 principle ammount and 7742 interest, i have also invested one lac in mutual fund.can i get tax exemptionfor on one lack under section 80c and on 7742 under section 80e or i will get only exemption on only one lac under section 80c please reply
my son has taken loan for around 12 lacs and my self asha malhotra (mother) is co-applicant and I have been paying interest on this loan since april 2009 till date .
can I take tax exemptions on this interest paid till date from my employer from gross income.
pl reply soon as the date for tax is approching fast and I need to convey my employer to provide me exemption under section 80E.
my son has taken loan for around 12 lacs and my self asha malhotra (mother) is co-applicant and I have bben apying interest on this loan since april 2009 till date .
can I take tax exemptions on this interest paid till date from my employer from gross income.
pl reply soon as the date for tax is approching fast and I need to convey my employer to provide me exemption under section 80E. ctsrst lf
My son has taken an education loan of Rs.20 lacs from SBI to pursue his higher studies abroad. He is the first applicant and I am the co-applicant. I am paying the interest amount towards the loan. Am I entitled to claim deduction under section 80E in respect of the interest paid ?
Sir,
My child is doing B.Tech. I had paid Ist semister tution fees of Rs.32000/- from my savings and afterward I take educational loan of Rs.25000/- for second Semister tution fees. My question is that can I claim full amount i.e. 32000+25000 = 57000/- under section 80C as tution fees alongwith interest on euducational loan under section 80E. or I can claim only 32000 as tution fees.
i have taken loan from Karnataka Bank for my CA course, am i ELIGIBLE FOR 80E?
I have taken loan from a US Bank for my studies abroad. i.e. the student loan is NOT from Indian bank.. Now I am working in India.. can i take deduction?
I had taken an educational loan back in 2005 for Rs. 170000.00. While starting repayment in year 2008, I saw the principal has risen up to Rs 230000 including the 2005 to 2009 interest. I have paid Rs 50000 this financial year. Now my outstanding is 189000 which is still more than my drawing limit (i.e. Rs 170000) So the whole payment has contributed to interest only. Can I get tax exemption of the total 50000 I paid this year (which includes interest of previous years also) or only this year interest of Rs 22000. please reply soon
Sir,
I had taken an educational loan back in 2005 for Rs. 170000.00. While starting repayment in 208, I saw the principal has risen up to Rs 230000 including the 2005 to 2009 interest. I have paid Rs 50000 this financial year. Now my outstanding is 189000 which is still more than my drawing limit (i.e. Rs 170000) So the whole payment has contributed to interest only. Can I get tax exemption of the total 50000 I paid this year (which includes interest of previous years also) or only this year interest of Rs 22000. please reply soon
Hi Tax Guru,
I have taken educational loan from State Bank of India for my MBA in overseas in 2006. I have paid almost 4+ lakhs towards my interest started paying since 2 years, however I am earning in New Zealand. The loan is in my name
1.Do I qualify for the deduction of interest under 80E?
Do I have to work in India to qualify?
if not>
2. What is the otherway of deduction of interest under 80E in my situation?
Will really appreciate your comments on this
Thanks
Hi ! Tax Guru,
I have taken educational loan for my brother who is dependent on me as my parent are no more.In appliction form of management institution I have signed as guardian.
Am I eligible for deduction of interest under 80E ?
Would appreciate your expert comment on same.
hi
Can some one tell me, what is the maximun limit of the amount on which one can have tax relief deduction..???
My son took a loan from a bank for a 3yr vocational course starting in 2005. Interest became payable in 2007. This has not been paid as he enrolled for advanced course. I wish to liquidate all outstandings, including interest. Can I claim benefit under 80E or any other section?