Under section 80E you can claim income tax deduction for Interest paid on Higher Education Loan.

Section 80E: Income Tax Deduction for Interest paid on Higher Education Loan

In case you or your spouse or child has taken an education loan for higher studies in India or Abroad then, the income tax department gives you the tax benefit on the amount of interest paid on such loans.The benefit of this deduction can be taken for the next 8 Assessment Years. Not all loans are eligible for this deduction. Only interest paid on a loan taken from Banks, Financial institutions or approved charitable institutions can be c, aimed as a deduction under section 80E of the income tax. This means in case you have taken any loan from your relatives, then the interest paid on such loans can not be claimed as an income tax deduction. Some other important points related to this income tax benefit have been summarised below. 

Eligibility:

Only the higher education loan taken for the following individuals shall be eligible for deduction under section 80E:

• Self
• Spouse
• Child
• By Legal Guardian

Loan Taken From:

The loan must be taken for higher studies but it should also be taken only from the following notified institutions

• Bank
• Financial Institution or
• Approved Charitable Institution

A loan taken from any other source except that mentioned above will not fetch you income tax deduction under section 80E.

Tax Benefit:

No tax benefit on the principal amount for higher education loan taken shall be made available under the income tax provisions. The tax benefit under section 80E shall be only

• On INTEREST paid
• For a period of 8 Assessment Years
• This deduction is allowed without any upper or lower limit

Important Note:

Under section 80E you can claim the complete amount which you have paid as interest as an income tax deduction. There is no ceiling under this section on the exemption limit.

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