What is Deduction under 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.
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:
- A loan must be taken from financial institutions or charitable institutes
- The loan taken from relatives or friends is not eligible for deduction
- The loan must be taken for the purpose of pursuing higher education for self or for a relative. Relative includes spouse, children and student for whom an individual is a legal guardian
- The repayment must be done by the taxpayer
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.
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 1, ITR 2, ITR 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.
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.
No. In case you have borrowed money from a relative or a friend, you would not be able to claim deduction under this section.
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.
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.
Yes, one can claim deduction u/s 80E as long as one is repaying the EMI on the loan taken.