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, my father took a loan for me of 4 lac for NIFT course(2009-13), his annual pay is less than 4 lac, but he still pay the interest for my education loan, sir is there any so that he wont have to pay interest for the loan, or he can get any benefit from it. the loan is from bank of India
Dear Sir/Madam,
My son has taken an education loan from nationalised bank during July 2012 for studies in India. I as guardian paying the monthly interest charged by the Bank
periodically. I am not a guarantor to the loan and the loan is in the name of my son. Am I eligible for Tax relief under section 80E.
KIndly enlighten me.
Dear Sir/Madam,
My son has taken an education loan in his name from SBI during Sept 2012 for MBA (IIM Indore). I as guardian paying the monthly interest charged by the Bank
periodically. I am not a guarantor to the loan and the loan is in the name of my son. Am I eligible for Tax relief under section 80E.
KIndly enlighten me.
Vinod Kumar
My Son has taken education loan MBA (IIM Indore) from SBI in his individual name
this year.
I am paying interest for the above loan .
Whether I Can claim deduction under section 80E for the interest actually paid by me.
Please clarify.
Regards
Vinod Kumar
sir, i have taken educational loan for my son to pursue higher education . I am serving the interest monthly. I am an income tax assesse kindly help me how to claim.
I have taken Higher Education Loan from my Provident Fund for my daughter’s education abroad.. The interest has been paid in the current financial year 20012-13.. Am I eligible for IT expemption under section 80E ?
I have taken education loan for my son for B.Tech. I am getting exemption under sec-80 E. The loan is still outstanding. 6 years have lapsed. Now I want to raise fresh education loan for pursuing MBA for my same son. Will I continue to get exemption on interest for additional education loan also. If yes for how much period.
Hai sir…
I got education loan(BE.ECE) of Rs.42,000 in 2005 on Indian bank. 2005 to 2008 I paid interest on every months. After 2008 I am not paying amount to bank. now with interest Rs.65,000. any possibilities to reduce interest rate??? please help me
Sir i got education loan for B.E by 2011 from Indian Bank. Is there any Interest reduction scheme is available for me …
Plz reply me
Dear Sir/Madam,
My son has taken an education loan from nationalised bank during July 2012 for studies in India. I as guardian paying the monthly interest charged by the Bank
periodically. I am not a guarantor to the loan and the loan is in the name of my son. Am I eligible for Tax relief under section 80E.
KIndly enlighten me.
regards
narayanaswamy
Im a male teacher(age30) on contract basis at a college . IM about to register for my Phd full time programme from the stste university. i am told that we will be paying a considerable sum on tution fees every term(6months) .the fees would be a strain on my budget and yet i end up paying tax.my salary per annum 2lacs 20k.
1- would taking an educational loan help me with tax deductions
2 does a Phd programme get covered ?
pls help
sir, my sontook loan from a SBBJ bank and he got the job last year and he is paying EMI regularly, what is the proceedure to get 80E IT excemption from bank? is online statement printout enough?
Hi Sir,
my father have taken education loan for me in 2005 for my PG. From the first month on wards my father paying intrest for that loan. Now i got the job and every month im paying 5000 to the bank including the intrest. can i use this amount for tax deduction. please suggest me.
sir, i have taken educational loan for my son to pursue higher education abroad. I am serving the interest monthly. I am an income tax assesse kindly help me how to claim.
Hai sir…
I got education loan(BE.CSE) of Rs.42,000 in 2005 on Indian bank. 2005 to 2008 I paid interest on every months. After 2008 I am not paying amount to bank. now with interest Rs.65,000. any possibilities to reduce interest rate??? please help me.
Hai sir…
I took education loan(BE.CSE) of Rs.42,000 in 2005 on Indian bank. 2005 to 2008 I paid interest on every months. After 2008 I am not paying amount to bank. now with interest Rs.65,000. any possibilities to reduce interest rate??? please help me.
sir/madam,
I took a education loan of rs90,000 in 2005 for my studies but due to some reason I was left from college and joined government job.Now on 13/10/12 my father paid all my loan amount 1,23,268 to the bank with interest in one time amount and I had to pay for it to my father.So can i claim benefit under 80E.please tell me also what documents are to be attached.
thanks
hello sir,
My name is jay prakash. i have taken loan from PNB, IIT Kharagpur. my total education loan is Rs. 2,61,000/- and total interest is Rs. 70,000. could anyone please tell me what would be most beneficial way to pay my education loan , so that i could income tax as much as possible. please reply.
thanking you,
Jay Prakash
sir, i hav taken educational loan of 400000 from bank and nw i am working with IDBI bank hw should i approach to get interest rate benefit
sir my son has taken a loan in his name of 10 lac and spent more than 10 lac in last two years as tution fee and others at a U.K. based university. plz help me how we parents and my son will benifit from tax rebate and intrest rebate..
Sir,
I had taken education loan for my wife on 2009 may and i am paying the intrest regularly in may.I had claimed the interst for 2009-2010 FY by taking a letter from the bank for the interset till march 31st.but the intrest is paid in may.the auditors are saying that we should not apply without paying to the bank.That i can only apply for FY2010-2011.
HI, I am going to pursue my higher studies in UK. I have taken a loan amount for Rs.20,00,000. THe problem is I am already running a business which is an individual account and net income is above 10 lakhs per annum and I am in highest slab paying 30% tax. Now I am going to pursue my higher studies and will the interest amount paid be eligible for tax deduction under 80e? Should the individual not have any income while applying loan to be eligible for tax deduction. Please Help me out.
sir can we claim deductionU/s 80E for studies abroad
I have taken education loan for my brother where I am the guarantor, my father has passed away years ago and I am the guardian for my brother. Can I claim the tax benefit for the interest which I have been paying for education loan as guarantor? In fact I claimed the tax benefit for the interest but it got rejected as bank statement in my brother’s name.
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Sir, I am pursuing EPGP (Executive PGP/ Non residential online MBA)
from IIM Kozhikode. The total fees is 5.2lakhs +taxes .Am I eligible for tax rebate under 80E?
Please guide me
sir i failed in inter 2nd year and that next year i passed am i elgible for eductional loan???
My wife is doing MBA, she wanted to take a educational loan for study. But i want to take tax benifit of that loan.
Then on whose name i should take this loan.
Regards,
Somanth
I AM AGE OF 45 YRS ,REC’D RS.900000/-,ALSO I WANT INTEREST ON MONTHLY OR QUATERLY OR HALF YEARLY WITH TAX RELIEF ,KINDLY ADVISE ANY PLAN
what is the max limit of interest under 80 E on which v can get deduction
Sir,
I have taken education loan for the higher studies of my son for doing MBA. I started paying instalments towards interest for the repayment holiday/moratorium period, but to my surprise i found that bank (Kangra Central CO–OP Bank Dharmsala Distt. Kangra H.P.) is charging compuond interest i.e. adding monthly interest in the principle and calculating the interest and then adding and so on. kindly help me in telling that what is the criteria for the calculation of the interest and what will be the EMI for a loan of Rs. Seven Lakhs RAISED in Feb.2010i.e. Rs 343000/on26-2-2010,203,000/on 10-11-2010, 110000/ on 8-4-11 and Rs. 100000./ on 10-2-12. i.e. total Rs. 7,56,000/ after a period of two years.
I am planning to take education loan for PGPM(MBA) course for my daughter where I will be co-applicant. I will be paying EMI( principal & interest) for this loan. Will deduction under section 80e is allowed to me. I am salaried person
I am planning to take education loan for PGPM(MBA) course for my daughter where I will be co-applicant. I will be paying EMI for this loan. Will deduction under section 80e is allowed to me. I am salaried person
Dear Sir,
I have taken an scholar education loan from SBI in 2008 for my management studies at . The above mentioned loan is floating in nature and was based on SBI’s PLR (SBAR) rate as the base rate concept was not in use at that point of time.
Now, when I went to my branch for getting education loan interest paid certificate for submitting to my employer, I found that my loan is still tied to PLR system. Post discussion with the Branch Manager, I submitted an application to move my loan interest rate to Base Rate system. Further I filled up the complaint form at SBI website for shifting my loan to Base Rate. Based on my request, I got a call from SBI on 24 February 2012 that my education loan can not be shifted to Base Rate. The concerned person told me that there is no system for shifting education loan to Base rate and only the Home Loans can be shifted to Base rate.
However, as per my knowledge RBI has allowed all types of loans to be migrated to Base rate based on request from the customer.
Also, I had sent a mail to “chairmansbi.customer@sbi.co.in” on February 27, 2012 on the same subject. However, I am yet to receive any communication in return.
Request you to guide me on the same. Can I approach the banking ombudsman to get help?
I am paying education loan which was taken on my name for my study (Engineering in india) in EMI. Can i mention deduction of interest and capital amount in 80E. ?
I had taken education loan for my B.E course. Now when I ask bankers to give me statement for whatever i have repaid , they are giving statement which includes all the amount repaid. But my CA is asking me to get statement which includes portion of interest paid seperately. Is there any format for this. Please help me. Its very urgent.
My daughter will be doing PG studies for which I have pay tuition fees 4 laks/year. In order to pay this amount I was thinking of taking a loan by pledging one of my Fixed deposits in SBI.
Can I claim deduction u/s 80E for the interest paid on this loan. Also can I claim deduction u/s 80C for this 4 lakhs.
regards
Venkat
I’m an it professional , I’ve paid 30000 intrest on my educational loan for the period of 2011-march to 2012 march , what is the procedure to file returns , si nce I have already paid tax in the form of TDS.
Hello,
I have taken education for my B.Tech course in year 2004 .i started course at 2004 and interest rate was 11% .Since last year i started the month EMI for the same .so please let me know the procedure to reduce the interest or principle amount ,is there any possibility of subsidy by Either Govt/Bank.
I’m waiting for your valuable feedback.
Thanks
Hi ,
My father took education loan for me 3 lac in 2007 to 2011 for 4 year Btech degree, and this amount i am paying after finishing my btech. so how can i get the tax benefit till when i am paying this amount.Please help me out in this
Dear Sir/Madam,
I am a registered private money lender. We give out loans to assist
people, firms who need to update their financial status all over the
world, with very Minimal annual Interest Rates as Low as 3% within a
1year to 30 years repayment duration period to any part of the
world. We give out loans within the range of 5,000USD to
100,000,000USD. Our loans are well insured for maximum security is
our priority.Interested person should contact us via E -mail:clintondukeloanfirm3@gmail.com
Regard,
Mr, Clinton DUKE.
SIR I HAVE TAKEN EDU. LOAN FROM CENTRAL BANK IN 2011 . BUT I HEARD THAT THAT THOSE WHO HAVE TAKEN EDU.LOAN BELOW 500000 RS. WILL GET RELIEF IN INTEREST.
WILL IT IS POSSIBLE
PLZ GET ME RPLY FAST
Can interest on loan taken for the higher education of daughter in law is available for exemption under 80E?
Hello Sir,
My father is a retired Govt. employee. I m working in a MNC.I want to take education loan for my brother MBA. will I get rebate from income tax.
As i have taken educational loan for for 3 lakhs and started to repay the amount i have started paying interest from 2009 and till date i am paying interest .The total amount for the current year is 23000 wiill i be eligible for tax deduction .As for the previous year the interest which i have accrued will i be the eligible for the current financial year deductions also and i just want to know by how much amount tax are deducted through 80 e.
Sir i borrowed 1.2 lakh for my engineering course 2007-2011..now my outstanding amount with interest is around 1.33lakh.can i get interst exemption under section 80E as my family income is below 4lakh
Sir… I have got an education loan for 6 lakh on & from 2007 to till for doing BE..& MBA for my daughters IN three phase. From this financial yr. i am repaying my loan interest monthly about Rs. 7000 through internet banking. as interest . can i able to claim tax deduction for this amount from this year.under 80 E. pls give necessary information. pl. reply to my mail-id.
Thanking you in anticipation.
Veerendra
Urjanagar 814154
Sir… I have got an education loan for 6 lakh on & from 2007 to till for doing BE..& MBA for my daughters IN three phase. From this financial yr. i am repaying my loan interest monthly about Rs. 7000 through internet banking. as interest . can i able to claim tax deduction for this amount from this year.under 80 E. pls give necessary informations. pl. reply to my mail-id.
Thanking you in anticipation.
Veerendra
Urjanagar 814154
Hi Sir,
I have taken an education loan of 3.5lacs in 2005 Dec, I have not paid a single penny till august, 2011. and the total amount bacame 5.5 lacs.. i paid 4lac in sep 2011. i asked the bank authority how much interest repayment i did. he gave me letter stating i have repayed 1.5 lac of interst. Am I eligible for the tax benift? can i show this letter along with loan statement to claim the tax benifit under sec 80E?
Waiting for your quick response.
Amit
Hi Sir,
parents repaying the educational loan for their son, is the parent gets the 80E tax benifit.