Section 80E allows individuals to claim tax deductions on interest payments for educational loans obtained for higher studies.
According to Section 80E of the Income Tax Act, 1961, you can claim a tax deduction on the interest that you pay on your educational loan. This tax deduction applies to the entire interest amount from EMIs paid in a financial year.
Note that only individuals can claim 80E deductions, corporations are not eligible. If you take an educational loan from a financial institution or a bank to pursue a higher education, the tax deduction under this section will be applicable.
You need to produce a bank/financier’s statement clearly showing the split between the principal repayments and the interest amount. This is crucial, as the tax deduction applies only to the interest amount paid on the educational loan.
The eligibility criteria for individuals and investments under Section 80E of the Income Tax Act are mentioned below:
Anyone who takes a loan to pursue higher education and is actively repaying the interest amount
Anyone paying the interest amount on the educational loan they have taken for their immediate family members
The following list of investments is covered u/s 80E of the Income Tax Act, 1961.
Loans for foreign education
Interest paid on an educational loan during the specified financial year
Note that you must take the loan to pursue higher studies in any educational or vocational field. The loans which are not related to education will not be covered for tax deductions u/s 80E of the Income Tax Act, 1961.
Below mentioned is the 80E deduction list:
Interest amount paid on an educational loan during a given financial year can be claimed for tax deductions
No limit on tax deductions for interest on educational loans; available for 8 years from loan repayment initiation
If the loan repayment tenor exceeds eight years, the interest amount paid after those eight years cannot be claimed for tax deductions
Only interest paid on an educational loan is eligible for tax deductions, while the principal amount is not covered
FAQs on Section 80E of the Income Tax Act
Can I claim the deductions under Section 80E if I take an educational loan to pursue my higher education abroad?
Yes, you can claim the deductions under Section 80E if you take an educational loan to pursue your higher education abroad.
What is the maximum amount you can claim for tax deduction?
There is no limit on the amount you could claim for tax deduction under this section.
Can Hindu Undivided Families claim the tax benefits under this section?
No, HUFs cannot claim the tax benefits under this section.
Can corporations claim the tax benefits under this section?
No, corporations cannot claim tax benefits under Section 80E.
Which course should I choose to claim the tax benefits under Section 80E?
To claim tax benefits under this section, take an educational loan for full-time undergraduate or postgraduate courses in specified fields.
Can I claim a tax deduction on the principal amount of the EMI u/s 80E?
No, you can only claim tax deduction on the interest of the EMI under this section.
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