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Whether Income Tax Exemption is available in respect of Educational Loan taken for the purposes of higher education abroad?

All salaried persons and pensioners should submit their Income Tax Final Statement (with respect to the A.Y 2022-203, Previous Year 2021-2022) before February 28, 2022. Income Tax Final Statement should be submitted before the relevant Drawing and Disbursing officers in the case of salaried persons and Sub-Treasury Officers or Bank Managers in the case of Pensioners.

Under the above circumstances, all of them are considering various possibilities to reduce their tax liabilities (Tax Planning and Tax Administration) .Chapter VIA offers various deductions including Sec 80 C deduction. At that juncture a relevant question is that whether Income Tax Exemption is available in respect of Educational Loan taken for the purposes of higher education abroad?. Following paragraphs give an analysis of the relevant clauses.

Income Tax Exemption on Educational Loan for higher education abroad

1. Sec 80 E deals with Deduction in respect of interest on loan taken for higher education.

2. As per Sec 80 E of the Income Tax Act 1961, you can claim interest on higher educational loan taken for the purposes of you or relatives of yours. Loan can be taken from the following institutions

a. Banks

b. Financial Institutions

c. Approved Charitable Institutions

3. Deduction can be claimed for 8 years or until the interest is paid by the assesse in full, whichever is earlier.

4. What is meant by higher education course as per Sec 80 E?

A course studied after passing Senior Secondary course from any recognized institutions of the any one of the following entities

a. Central Government

b. State Governments

c. Local Authority

d. Authority authorized by the Central Government or the State Governments or the Local Authority.

5. By analyzing the above clauses , the author concludes that a assesse can claim interest in respect of Educational Loan taken for the purposes of higher education abroad (without limit). There are ITAT judgements in favour of the stand taken by the author. It is safe by acquiring a recognition certificate in respect of your course from any recognized Indian Universities.

6. Sec 80 E is quite different from SEC 80 C.

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