Income Tax Exemption for Education Loans Under Section 80E
- 16 Comment
Introduction
In this article I will be writing about the Income Tax exemption for the education loans. Earlier I have written few articles about the education loans in India and the new interest free education loans announced by the RBI. Many of us not aware of the tax exemption on the interest amount paid for the education loans. This article explains the topic in detail. Please post your doubts and feedback in the comments section. Please subscribe to our future articles here.
Tax Exemption on Section 80E
In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education or for the purpose of higher education of his relative
- Here the relative means his/her spouse and children.
- The deduction is allowed from the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest is paid by the assessee in full, whichever is earlier.
- Higher education means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognized by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so.
Summary
I hope this is very use for the parents who took the education loan towards their children. Note that the principal payment is not exempted from the tax. If you have any doubts please post it in the comments section.
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16 Comments on this post
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p.ranganadharao said:
I have taken Education loan for my son for studing BE at SBH Bank for each year 1,00,00 and i am paying intrest for ever month Rs.1000 . Kindly advise me whether the intrest payed is exempted from income tax before calculation.
December 15th, 2009 at 3:53 am -
nikhil bhatia said:
Sir/Madam
My father took an education loan on my name. Can he get the exemption, if i dont avail it, even if i am earning. He paid it out of his account.
Can u also suggest where do i put 50k as saving, NSC or PPF, which is a better option considering nex direct tax code which makes both of them taxable. Please reply on my mail id also.
Thanks
NikhilJanuary 7th, 2010 at 6:23 am -
s p mall said:
can the benefit of section 80 E BE TAKEN SIMULTANEOUSLY IN MORE THAN ONE FILE IF THERE ARE JOINT BORROWER LIKE FATHER AND SON IF YES WHAT WOULD BE THE CEILING LIMIT
January 11th, 2010 at 10:23 am -
K Ravi Kumar said:
Sir/Madam,
My Father had taken education loan for my studies. It is the joint account of mine and my father. Now, i am paying the interest for the bank. Kindly advise me whether the intrest payed is exempted from income tax before calculation(with joint account).
January 17th, 2010 at 11:21 pm -
manikandan said:
I have Applied for education loan when i was doing my UG ,Now i am working and paying my loan as monthly can i declare my education loan for Tax Exemption
January 19th, 2010 at 8:33 am -
manikandan said:
I have Applied for education loan when i was doing my UG ,Now i am working and paying my loan with interest as monthly can i declare my education loan for Tax Exemption..
January 19th, 2010 at 8:35 am -
krishnas said:
Hello manikandan,
Interest on education loans can be deducted under section 80E.
Thanks,
KrishnaJanuary 19th, 2010 at 7:38 pm -
siva said:
sir i have taken education loan from a bank
in 2009-2010 i have paid nearly 100000 to wards loan account
bank is giving the statement that for clearence 7000 for interest and principle for remaining amount .by ur article i got that interest is directly deducted.
now my question is that
can i show the principle amount for savings ?February 3rd, 2010 at 4:31 am -
aman said:
Hi!
In reference to deduction on interest what if education loan has become overdrawn because of interest accumulated during moratorium and limit regularised by bank by considering accumulated interest as a part of principal. eg. 450000 rs was the outstanding inclusive of interest nd borrower paid rs. 150000 to reduce the overdrawn amount to 300000. But the same is not being reflected in interest certificate.Regards
February 11th, 2010 at 1:31 am -
M.B.Vijayakumar said:
Sir,
I would like to know any announcement of free interest on education loan in the forthcoming budget 2010
Regards,
M.B.Vijayakumar
February 26th, 2010 at 4:40 pm -
P Madhu Sudhana Rao said:
Sir,
On the Education Loan for foreign studies, I understand very well the 80E relating to Interest on the loan. I would like to know if there is any exemption on Bank processing charges and bank loan insurance charges that we pay to the banker on this loan.With regards
MadhusudhanMarch 8th, 2010 at 6:43 pm -
d m shukla said:
I have taken education loan for my son. Whether I am eligible to get tax exemtion for the interest on loan at source, i.e to get exemption from my salary ?. or I have to claim refund from Income tax department ? pl reply
April 30th, 2010 at 12:47 am -
Venkatesh Ganesan said:
Hello Sir,
In May 2009 I got my education loan disbursed by SBI for my MBA abroad.
From the very next month I started servicing the simple interest portion thus maintaing the same prinicpal.
1. Is section 80E exemption available for education completed abroad?
2. Is 80E exemption applicable to the simple interest portion also? I will start EMI from this year only though.
Thanks in advance.May 16th, 2010 at 11:10 pm -
Vasanth said:
Hi,
My wife taken the education loan in her name for doing MCA, now she is not working, i am paying the loan and interest part acn i claim the installment amount under 80E?
July 19th, 2010 at 11:05 pm -
Chetty said:
I have taken education loan for my under graduation (BE) for four years.Now I am in a job so I’m paying back the interest and the premium on monthlty basis. Am I eligible for tax exemption for the interest I am paying ? Does the criteria differs from company to company or it has nothing to do with the company, because my company HR told me that tax exemption is entertained only for the education of our children or the loan taken for the pursuing studies.
August 22nd, 2010 at 2:53 am
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