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.
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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