Essential conditions for claiming deduction under section 80E of income tax act, 1961 for Interest on Education Loans:
This deduction under section 80E for for Interest on Education Loans is over and above the Rs 1,50,000 deduction allowed under section 80C of Income Tax Act, 1961.
|1||Who Can Claim deduction under section 80E
||ONLY Individuals||Not available to HUF or any other person|
|2||The purpose of the loan||To pursue higher studies in India or outside India||–|
|3||From where the loan should be taken||From Any Bank / financial institution or any approved charitable institutions||Loans taken from friends or relatives and loan taken from any financial institution outside India don’t qualify for the deduction under section 80E|
|4||Meaning of Higher studies||It includes both the Vocational courses as well as the regular courses pursued after passing the senior secondary examination or its equivalent exam.|
|5||Deduction allowed if loan taken for||Higher education of self, spouse or children or the student for whom the individual is a legal guardian||Loan taken for siblings (brother / sister) or other relatives (in-laws, nephew, niece, etc.) would not qualify for section 80E benefit.|
|6||Deduction Amount||Total interest paid during the financial year.
No limit on the maximum amount of deduction under section 80E
|No Tax benefit is allowed for the principal repayment|
|7||Period of Deduction:||It is available from the year in which individual starts paying interest on loan and in 7 succeeding years.||Deduction is allowed for maximum period of 8 years or until the interest is repaid in full, whichever is earlier.|