X
    Categories: Income Tax

Deduction under Section 80 E of Income Tax Act,1961

Section 80 E of Income Tax Act,1961 – Being increase in number of students going abroad or foreign countries for their further higher educational qualifications, the financial institution are being approached to give loans for higher education and remit the fees in foreign currency. On the same note Finance committee encourages higher education from domestic or foreign universities by granting loans at flexible rates and tax benefits on loan applied.

So while planning of flying abroad for higher education and worried about the high expenses leading to approval of education loan, one benefit that can be availed is Deduction of Interest on Education loan.

Section 80 E – Defining Eligibility Criteria :

  1. This section is only applicable to an Individual assesse.
  2. Loans for higher educational qualification, that means qualification courses after passing senior secondary or vocational courses.
  3. From financial institution or charitable institution.
  4. Loan taken for whom : Self (individual) Spouse , Children of Individual or for whom is acting as legal guardian.

Tenure of Deduction:

Once all the above criteria is fulfilled, Individual can claim the deduction of interest paid on education loan taken up till eight consecutive years once start repaying the installment or until interest is repaid whichever is earlier. There is no threshold limit for the same that means no amount limit is attached with this section.Thus while fixing loan repayment schedule 2 points to be noted are 1. Complete repayment should be done in 8 years. 2. No cap on amount limit has been specified so claim amount in total without any limit in all of the eight years. But will be available only when actually interest is paid out of his earned income. Also only deduction in respect of Interest is allowed and not on principal repayment amount. For claiming deduction of principal amount Section 80C of Finance Bill can be referred which allows upto ₹ 1.5 Lakhs.

Team TaxReturnWala: