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
sir,
I am doing my M.B.A., for that i have taken a loan of 316,970 , from H.D.F.C bank, my father is an defense employee who is paying my loan amount ,i also paying interest amount or 3,434 to bank ,i don’t know how to claim the tax benefits .
following things i want to know
1- what documents to be required to claim my benefit ?
2- where to be submit these documents?
I am paying my interest amount from last year APRIL 2011,how can my father can avail the benefits from under section 80e.
please let me inform immediately as soon as possible.
Thanking you
Shailesh
Sir, I am employed in a salaried job and I have availed an Education loan for Rs.3.30 lacs from a scheduled bank. The course which I have done is meant for SAP certification conducted by Siemens and the course duration is 1 month.
I am making the repayment since June 2010 and had not availed any tax benefits.Pl. let me know If Iam eligible to get exemption u/s Sec 80E.
Thanks Raghuram R
dear sir… I have got an education loan for 1 lakh on 2007 for doing BE.. since i was a minor at that time the loan account was created on both my name and my father name. Now i am working in a software company. From september 2011 onwards i am repaying my loan monthly 3000 rs through internet banking. seperateley they(bank) debits monthly 850 rs as interest . can i able to claim tax deduction for this amount from this year.. pls give necessary informations… what are the steps to be followed to utilise 80 E section.. pls reply to my mail-id.
thanking you..
Assessee has taken loan in the year 2007 for his son’s education. The loan taken on his name and he is paying the interest & EMI. In the year 2010 he is died due to some disease. Now his son is working in software company. He is paying tax on his salary income. He is also paying the interest & outstanding loan which is completely repayable by 2014. Can he as an assessee claim the deduction under section 80E for such interest portion ? can you please suggest…..
I have taken loan in yr.2009 and repaying since 2011, I am working in software company now ..As per guidelines given to us from company for deduction under education load is as below:-
“Eligible if loan is availed by the employee for self, spouse or children for pursuing higher education on or before 01-Apr-2004”
..Please suggest as I have taken load in year 2009 and guidline is saying load is availed on on before 2004 ..I am eligible to apply exemption under 80 E
I would like to know, if I go for an educational loan for my daughter
1. Can I claim the IT benefits by paying interest during the moratorium period.
2. Can she start paying the EMI after employment and claim IT benefits.
Regards
Melvin
Hi Sir, Please let me know that the benefit u/s 80E is available for the repayment of Education Loan taken from an institution out of India and the EMI is paying from the income generated in India.
Hi,
My wife took education loan (Join account with my mother-in-law) for pursuing B.E before our marriage. Now she is fully dependent on me. I am paying the loan EMI. Am I eligible for Tax deduction?
Thanks in advance,
Bala
Hi I took a education loan. I am planning to deduct the intereset paid on educaton loan under 80E. I need a format in which I have to request a letter from bank. Is there any specific format I have to get the letter from them. Do I need to get the statements also from the bank.
Hi ..
My father is the guarantor for my education loan and loan is also in the name of my father.I submitted all my certificate xerox when taken loan. But loan is there in my father name now im repaying. In the statement also my father name coming. Please let me know Can I eligible for Interest exemption.
Thanks
Bhaskar
I got the education loan by 2006 in state bank of India. Is eligible for interest cancellation?? plz reply anybody……..
i need to file online return but just wanted to have some clarification on two questions :-
1) my company had not considered hra as it wasnt a debit from my bank account, so if i claim hra, how do i send the proofs
2) my education loan interest has been considered till november so how do i claim interest rebate for dec to mar. for this will statement taken from internet banking work.
Thanks and regards,
Rozina
Dear Members,
I am 40 years of age and working in Accounts Management and Taxation for a Pvt.Ltd. co from last 15 years. I have not cleared my B’Com examination since failed in one subject in my B’Com final examination. Now I want to do M’Com directly without graduation degree. Is it possible.
Please let me know the details.
Thank you.
I would like to persue MDP program at IIM for 15 days after BSc. I can be eligible for 80E.
Who is a Legal Guardian? With the parents living, can someone else become he legal guardian?
Hi,
I have take educational loan for my B.E course and now repaying it.. Please let me know if I am eligible for the tax relaxation.
Hi,recently i joined to MS program.
I hasn’t tried for eduction loan,but i have manage to pay my fee through my savings,can i show that amount in receipts for my IT.
sir i have taken loan for higher studies 1.5 lacs, and at starting of 2 nd year i dropped college due to some reasons now a year has been passed.and i have pay amount but earlier also we didnt report to bank about it as we were unaware i want to do it create any problem regarding this?? plz help me out sirrr
thank you
I have taken Education loan for my sister who is studying BTech.The Education loan is in her name.So can i show that loan interest to the 80 E Sec,interest on education loam.Pls suggest
Hi sir this is pratap . i took education loan 70,000/- for MBA. recently i got job thats why i didn’t pay any interest. Recently i got notice from bank now outstanding amount 93,000. and over due amount 35000. please let me know am i eligible for deduction under 80E
please i look to forward hearing from you
Hello sir i am a homeopathic student plz tel me about interest cancellation scheme……………plz sir very urgent
Hi Sir/Mam, i have taken education loan to study BE, i’m not getting the scheme of deducing the interest for loan pls do inform me…….
Hi
i had taken an education loan of 3.5 lacs in june 2007 for higher studies and repaid it in dec 2009. The totak interest component was rs. 72,061 (out of which rs 25374 pertains to the yeaar 2009-2010.
I had also registered for CFA (USA) and paid an amount of rs 40,000 aprox as registration, curriculum and examination fees for a distant learning course. Examination held in june 2010. while the registration fees was paid in Feb 2010.
Please suggest the amount that can be claimed as deduction for FY 2009-2010 and FY 2010-2011
Urgent
thanks and regards
Vinay Jain
I had taken the education loan in nov 2003 for my B.E. Amount was 150000 principal. I started paying in june 2008 & completed it in July 2010. I paid around 91000 interest. During my loan payment i was not under taxable category. But now i am in taxable category for the year 2010-2011. So can i claim under section 80E for exemption of the interest paid during the year (june 2008-july 2010) for the year 2010-2011. Kindly clarify my doubt
I have taken loan of Rs 1,50,000 from Credila Financing company( HDFC PVt Ltd) for part time MBA.Can I claim deduction of the above payment for the purpose of income tax
what about u.c.o bank edu loan interest?
i took education loan facility from punjan national Bank. wich is Rs. 20.0 lec conditaion of Bank interest normal charges @ 11% per Qtr and instolment due after complication of study or period of 3 year i drew amount by NEFT of Rs 10-10 lacs there two part against and paid to a foreign university to fund education of my daughter. bank debited interest up to 31.12.2010 Rs. 42413/-
Can I claim deduction of the above payment for the purpose of income tax.
i took loan for my two daughters for higher education.
i requested to the bank that i wanted to deposit the interest on loan but they have not taken any interest for payment of interest on education loan. they simply inform me that i need not to worry for the payment of interest. the bank will inform for repayment and interest. please advise me the procedure for getting rebete under section 89E
i took over-draft facility from Bank. I pledged Rs.16 lacs worth fixed-deposit in Bank and drew a over-draft of Rs 16 lacs there against and paid to an Indian institution based abroad and which is affiliated to a foreign university to fund education of my daughter. This money which I fixe-deposited was out of my retirement dues which I got this year.
Can I claim deduction of the above payment for the purpose of income tax.
i took an education loan and paying rs 5200 per month and interest rate applicable is 11%..so let me know how much deduction i can claim?
it is a good help for me to use this site to clear my doubts
Hi,
I would like to know whether the deduction under 80 E is over and above the total limit of 1 lakh or included within the limit of 1 lakh.
Hi,
I took Education Loan for my son in 2004,he has completed his study in 2008 and after that from 2009 he is making repayment.Can I avail the rebate under section 80C for the interest amount paid during the financial year.
Please reply.
Hi, I have taken a loan from a lending institution IDAPP (http://www. edfinancial.com/IDAPP ) in the U.S. for mgt.studies in U.S and continue to pay interest and principal. Does section 80E apply in this case ? Is IDAPP in U.S. part of the definition of ‘financial institution’ as envisaged in section 80E and is there any court ruling in this regard. If yes , Can you please send any court rulings in this regard so I can have this sent to my employer for appropriate deductions. Also I continue to work in india and not in the US after the completion of the program.
Sir,
I have taken education loan to my son. Now I am paying interest on education loan. Can I eligible to claim under 80E. Please clarfy.
availed house loan for daughter. But during this finanical she is married . can i claim here education loan interest for this financial year. if no can her spouse claim the same
I HAVE TAKEN THE EDUCATION LOAN FOR MY WARDS FROM NTPC LTD .MAY I GET THE TAX BENEFIT?
Sir,
I have taken a loan of 2 lacs for my Graduation from a bank. I start filling my loan in Jan 2010 and amount was around 2.9 Lacs.
In the financial year ended in 2010, I didn’t submit any document for tax rebate.
By the starting of this financial year as on 01/04/2010, I have to pay 2.54 Lacs; and by the end of October I have paid 2.54 Lacs + 1600 as interest for this financial year.
My Question is what will be the amount for which I will be getting tax rebate.
I will be very Thank full to you, if you clarify my doubt, as I am getting different input from different sources.
Sir,
I have taken education loan from a nationalised bank in 2005. I am claiming interest paid, from my salary bank a/c, on loan from Income tax.
My questions:
1. My son is earning now, whether I can claim interest on loan, still now ?
2. I have read somewhere that repayment of education loan is also allowed u/s 80 E. Can I reopen my previous assessment to claim repayment of loan.
Thanking you.
Pankaj Kapadia
Hi,
I have taken a loan for a professional course, which is SAP (1 month full time).
I have taken this education loan from HDFC Bank, Kindly let me know if I could use section 80E and claim the interest part which i am paying.
Hi,
I have taken a loan for a professional course, which is SAP (1 month full time).
I have taken this education loan from HDFC Bank, Kindly let me know if I could use section 80E and claim the interest part which i am paying.
Thanks & Regards,
C.S.Balaji
I have taken edu. loan of 3.5 lakh for my son for pgdm course in Oct 09.I have paid interest in FY 2010-11 before starting EMI.Is it deducted directly from taxable income .Give me detailed rule under 80 E to quote .
sir…………
i have taken education loan amount 280000 from soth malabar gramina bank.can i go ahead with section80E to deduct my loan ..please give an answer
I have taken loan from allahabad bank.
is there any rule for rebeat in interest according to goverment rule
I am student of IIPM. My family condition has not financial strong. So i had take the education loan form 4 Lack for the 10% interest in the cource MBA . So I have question why indian central government had not apply the roles for the 4% interest in education loan.
If Rahul Ghanthe is also said the why education loan interesr is higher than other loan . Like housing loan interesr is low 8% And education loan interest is higher 10%. So plese Reply me.
Thank You.
Sir i have taken education loan from bank in 2006 amount is 1,20,000.00Rs for ding degree, now ( 2010 ) wit intersets it is 1,80,000.00Rs and i also got letter from the bank to fill the money 3,600.00Rs per month ( with 60 installments ),i am dinig job in private comapny and also paying tax per month ,education loan comes under 80C section ,but company will pay the 80CCF and 80C loans ,is it possible to comapny will pay the 3,600.00Rs per month or is it possible to can i avoid the paying the tax i,e this monthly paying tax can i pay as bank loan with 3,600.00Rs per month ? plz help me thank you sir.
i have taken a loan from SBI of my locality for pursuing PGDM course which is approved by AICTE and i want to know that is the interest chargeable to on my loan amount will exempted or not….
yours ARUN
I have a loan of Rs. 1,00,000 from SBI for the period 2008-2010. I will start paying the amount from December 2010. How much tax can be deducted and what I have to do for that?
I have taken Education loan from SBI in the year 2006.I just want to know can i avail the deduction of interest under 80E ??????
My sister has got the admission in Dental college will she get the the interest free loan, my family income is less then 2 lac. please help. Also we have tried in Canara bank But thy denied for any such scheme. Thanks