Understanding Section 80E and its importance for Education Loan Applicants - FAQ

Section 80E gives taxpayers added benefits for repayment of education loans. A sound understanding of this section’s details can help save money on education loan interests. Education loans have become increasingly popular as Indian students plan to get degrees from world’s best universities in India and abroad.

Frequently Asked Questions

What is Section 80E?

Under Section 80E of the Income Tax Act of India 1961, an individual can claim deduction for the repayment of interest on the education loan. This means that the interest paid on the education loan can be deducted from the taxpayer’s taxable income.

Who can benefit from deductions under Section 80E?

Any Indian citizen who takes an education loan for self, spouse, children or a student of whom the individual is a legal guardian is eligible for deductions under Section 80E.

Which course should I opt for to avail tax benefits?

To avail tax benefits under Section 80E, education loan can be taken for full-time studies for any graduate or post-graduate course in engineering, medicine, management or for post-graduate course in applied sciences or pure sciences including mathematics and statistics.

From which bank should I take education loan to avail tax benefits?

Education loan taken from any Registered Financial Institution or approved Charitable Institution is eligible for deductions under Section 80E. Any loan taken from friends, relatives, non-approved institutions or foreign institutions will not be eligible for deductions under Section 80E.

The Gazette Notification of Credila can be viewed at www.incometaxindia.gov.in

What part of education loan is deductible under Section 80E?

Only the interest part of the education loan can be claimed as deduction under Section 80E. The Principal amount of the education loan cannot be claimed as a deduction under Section 80E.

For how long can I claim the deductions under Section 80E?

The deductions under Section 80E can be claimed in the year when the individual starts repaying the interest of the loan and for 7 succeeding years. So, the deductions can be claimed till the interest part of the loan is fully repaid or for a period of 8 years, whichever occurs earlier.

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