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Section 80E : Deduction for Interest on Education Loan

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Hiral Vakil

Chapter VI-A
Interest
Section 80E

Section 80E allows a deduction for interest paid on repayment of education loan taken for higher education. However, a taxpayer can not claim a deduction on principal repayment. You can claim this income tax deduction while filing your ITR.

Deduction under section 80E is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime
Tip
Deduction under section 80E is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime

Who is Eligible to Claim Deduction for Education Loan Under Section 80E?

Deduction under the section can be claimed by individuals only. This deduction can be claimed even if a loan is taken to pursue higher studies outside India. HUF or company or partnership firm can not claim deduction under this section. Following are the additional conditions to claim the deduction:

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What is the Education Loan Deduction Limit Under Section 80E?

There is no monetary limit u/s 80E. An individual can claim the total interest amount paid as a deduction. One has to note that, a deduction is available only for 8 consecutive years.

For example, Arjun has taken an education loan for his higher education in FY 2016-17 and the interest payable per annum is INR 1,00,000. Arjun manages to repay the loan in 5 years so he is eligible to claim deduction u/s 80E on the interest repayment of INR 1,00,000 for those 5 years.

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ITR Form Applicable for Section 80E

The taxpayer can claim this deduction while filing ITR if all the above-mentioned conditions are full-filled. Individuals/HUFs can claim 80E in any of the ITR forms, i.e, ITR 1ITR 2ITR 3 and ITR 4 depending upon their income sources. The due date for filing ITR is 31st July of the next FY if the tax audit is not applicable.

For FY 2019-20, due to COVID-19 the due date for filing ITR has been extended to 10th January 2021 for all taxpayer.
Tip
For FY 2019-20, due to COVID-19 the due date for filing ITR has been extended to 10th January 2021 for all taxpayer.

Supporting Documents

The only document that is required in this case apart from the common documents such as Form 16, PAN etc. is a certificate from your bank or financial institution or approved charitable institution from whom such an education loan has been taken.

Tax Savings & Deductions: Section 80C, 80CCE, 80D, 80TTA & others
Learn more about the deductions that can be claimed on certain expenses
Read More
Tax Savings & Deductions: Section 80C, 80CCE, 80D, 80TTA & others
Learn more about the deductions that can be claimed on certain expenses
Read More

FAQs

Can I claim deduction u/s 80E for an education loan taken from relative or friend?

No. In case you have borrowed money from a relative or a friend, you would not be able to claim deduction under this section.

Can I claim deduction u/s 80E if my father has paid the loan?

No, you can not claim deduction u/s 80E. However, your father can claim a deduction u/s 80E. Because relative includes children of an individual.

What does higher education mean under section 80E?

Higher education includes all the fields of study pursued after passing the senior secondary examination or its equivalent exam. It includes vocational as well as regular courses.

For my daughter’s further education in the United States, I took an employee educational loan from the company that I am employeed at. Can I claim a deduction under section 80E?

No, deduction under section 80E of Income Tax Act can only be claimed if the loan is taken from a financial or charitable institution.

My father took a loan for my higher education 2 years ago and claimed deduction u/s 80E, now I have finished studying and started earning. Can I now claim a deduction u/s 80E instead of my father?

Yes, one can claim deduction u/s 80E as long as one is repaying the EMI on the loan taken.

Got Questions? Ask Away!

  1. Hey @sushil_verma

    There are a wide range of deductions that you can claim. Apart from Section 80C tax deductions, you could claim deductions up to INR 25,000 (INR 50,000 for Senior Citizens) buying Mediclaim u/s 80D. You can claim a deduction of INR 50,000 on home loan interest under Section 80EE.

  2. Hey @Dia_malhotra , there are many deductions that you can avail of. Your salary package may include different allowances like House Rent Allowance (HRA), conveyance, transport allowance, medical reimbursement, etc. Additionally, some of these allowances are exempt up to a certain limit under section 10 of the Income Tax Act.

    For eg,

    • Medical allowance is exempt up to INR 15,000 on a reimbursement basis.
    • Children education allowance is exempt up to Rs. 200 per child per month up to a maximum of two children.
    • Conveyance allowance is exempt up to a maximum of Rs. 1600 per month.

    Tax on employment and entertainment allowance will also be allowed as a deduction from the salary income. Employment tax is deducted from your salary by your employer and then it is deposited to the state government.

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