Section 80E of income tax act is a tax-saving provision that provides tax deductions to individuals who have taken education loans to pursue their higher studies. Hence, 80E Deduction comes with the dual benefit of helping you pay for your education while also saving you money on taxes. However, it is important to note that the deduction is available only on the interest portion of the loan and not on the principal amount of the loan.
What is Section 80E of Income Tax Act?
Section 80E allows a deduction for interest paid on repayment of education loans taken for higher education. However, a taxpayer can not claim a deduction on principal repayment.
Note: If the taxpayers opt for the new tax regime, they cannot claim interest on the education loan deduction.
Eligibility Criteria to Claim 80E Deduction
Only individuals can claim the 80E deduction. Hence, HUF, a company, or a partnership firm can not claim a deduction under this section.
The following are the additional conditions to claim the deduction:
- A loan must be taken from financial institutions or charitable institutes. Hence, the loan taken from relatives or friends is not eligible for deduction
- The purpose of the loan is for pursuing higher education for self or for a relative. Relative includes spouse, children, and student for whom an individual is a legal guardian.
- The loan should be taken under the name of the taxpayer.
- Moreover, the repayment of the education loan must be done by the taxpayer.
Section 80E Deduction Limit and Timeframe of Deduction
There is no monetary limit u/s 80E. An individual can claim the total interest amount paid as a deduction. However, it is important to note that, a deduction is available only for 8 consecutive years. The deduction for the interest on the loan begins from the year in which the individual starts repaying the loan.
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 lakh. Arjun manages to repay the loan in 5 years so he is eligible to claim an 80E deduction on the interest repayment of INR 1 lakh for those 5 years.
ITR Form Applicable
The taxpayer can claim deductions u/s 80E while filing ITR by fulfilling the above conditions. Individuals can claim this deduction in any of the ITR forms, i.e, ITR 1, ITR 2, ITR 3, and ITR 4 depending upon their income sources.
Documents Required for 80E
- Loan Certificate from your bank or financial institution or approved charitable institution
No. In case you have borrowed money from a relative or a friend, you will not be able to claim a deduction under this section.
No, you can not claim 80E Deduction. However, since your father has paid for your education loan and the definition of relative includes the children of an individual, your father is eligible to claim this deduction while filing his ITR subject to the loan being in your father’s name.
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.
No, deduction under section 80E of Income Tax Act can only be claimed if the loan is taken from a financial or charitable institution.
No, Section 80E deals with tax deductions on the interest component of loan repayment. You can claim the tuition fee expense u/s 80C.
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.
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.
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.
The benefit Section 80EEB can be claimed by individuals only. An individual taxpayer can claim interest on loan of an electric vehicle of up to INR 1.5 lacs u/s 80EEB. However, if the electric vehicle is used for the purpose of business, the vehicle should be reported as an asset, loan should be reported as a liability and the interest on loan can be claimed as a business expense irrespective of the amount. (We have updated the article with the changes).
Thus, if you have a proprietorship business, you should claim interest amount as a business expense only if the vehicle is used for business purpose. However, if it is used for personal purpose, you can claim deduction of interest u/s 80EEB in your ITR since you would be reporting both personal and business income in the ITR (under your PAN).
As per the Income Tax Act, the deduction under Section 80EEB is applicable from 1st April 2020 i.e. FY 2020-21.
Hey @Sharath_thomas , we have updated the content according to the appropriate assessment year. Thanks for the feedback.
No issues. You’re welcome!
In case of capital gain income (LTCG/STCG), transfer expenses are allowed as deduction, except STT.
However, in case of business income (F&O, intraday), all expenses incurred for the business (including STT) are eligible to claim deduction in ITR.
Hope, it helps!
Is it possible to claim deductions under S. 80CCF for Infra bonds bought in the secondary market and held to maturity?
There were a number of 10 year infra bonds issued in the 2010- 2013 period, which will start maturing soon. These are all listed on the exchanges (although hardly any liquidity or transactions in them). If I were to buy some of these bonds in the open markets and hold them in my demat to maturity (<3 years), is it possible to claim tax deductions (upto 20k per year) under 80CCF for buying?
I couldn’t find anything on this. Any help is appreciated.
Yes you can claim deduction under 80CCF for investment made in specified infrastructure and other tax saving bonds bought in the secondary market and held to maturity.
Deduction under Section 80CCF can be availed only through investment in certain tax saving bonds, issued by banks or corporations after gaining permission from the government which shall be restricted upto 10,000 per year.
These bonds are generally long term bonds, having tenure of more than 5 years with a lock in period of 5 years in most of the cases. These bonds can be sold after the lock in period!
Also, interest earned on these bonds will be taxable.
Hope this helps!
Hi, I need to file my income tax for FY21, I am using Quicko platform for filing, I wanted to confirm if the ELSS investment amount for the FY21 is to be added in the section 80C, since I already the amount of Rs30,072 , should I add my ELSS amount to this existing amount and submit the total
Hey @Sheirsh_Saxena, yes, the investment amount needs to be added under 80C.
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