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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. |
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Sir I had taken higher education loan of 8 lakh in 2017 and there was 4 years moratorium on repayment …in 2021-22 I repaid the the whole loan amount of 8 lakh plus total accrued interest of 155950.. now loan account stands closed.. can I claim 80e exemption on 155950 which includes interest of current year plus that of previous years…
Is the Loan processing fee also considered as Interest for education loan here ?
Ref. As loan processing fee for home loan is considered for deduction similar to interest.
Sir if father takes education loan (loan account – father) for higher education of son. Son is repaying education loan. then if father is not claiming deduction u/s 80 e ,can son claim 80 e deduction
If the education loan is taken for education of son for medical coaching then will the interest on loan for paying the coaching fee will also be eligible for deduction u/s 80E?
Mr Jamal
The deduction is allowed in the year of payment.
it can not be claimed in two years by dividing the amount of premium.
Taken medical insurance for self and spouse from HDFC ERGO for 2 years period combined and a total premium of about Rs 35000/- is paid at a time. Can the amount be divided into 2 parts equally and claimed in two financial years for accessment purpose.