Deduction under Section 80E for Interest on Education Loan

As soon as the individuals complete the education and then start a new career, most of them neglect to claim Income Tax benefits on interest on Education loan. The deduction with respect to interest on availing loan for pursuing higher education is available under Section 80E of Income Tax Act. This guide discusses the eligibility and conditions to claim the Income Tax benefits under Section 80E.

Who can claim deduction under Section 80E?

Deduction for interest on educational loan is available to an Individual. Members of Hindu Undivided Family (HUF) are not eligible to claim the deduction.

Conditions to claim 80E Deductions -

  1. Loan must be availed from:
    • a) Financial Institution.
    • b) Approved Charitable Institution.

    If loan is taken from Friends/Relatives, no deduction is allowed for interest on education loan under Section 80E.

  2. The loan must be availed for pursuing higher education of the individual, his/her spouse/children or the student for whom the individual is the legal guardian. Higher education can be in other counties excluding India.
  3. Deduction is allowed in respect of interest on educational loan paid during the year. There is no deduction allowed for:
    • a) Interest which is due and has not been paid during the year.
    • b) Repayment of principal amount of loan.
  4. Deduction under Section 80E is available only to the individual who has availed the loan. There is no deduction allowed to an individual who repays but had not availed.
  5. There is no deduction for repayment of principal or interest on Educational Loan allowed under Section 80C.

Example 1: If Ramesh has availed educational loan on his name for his son Sachin, Ramesh can only claim deduction under Section 80E if he has paid the interest. If the interest is paid by Sachin, Ramesh is not eligible to claim any sort of deduction under Section 80E.

Example 2: Virat has taken educational loan for pursuing his studies on his name and he pays interest from his own sources, Virat is eligible for tax benefits under Section 80E.

Amount of 80E deduction : The entire interest paid during the financial year is allowed as deduction.

Period of 80E deduction:The deduction is available from the year in which the individual starts repaying the loan upto 7 consecutive years thereafter or until the entire interest has been repaid, whichever is earlier.

Example : Amit has availed educational loan to study MBA during the financial year 2013-14 and plans to start repaying the loan after completing the studies i.e from Financial year 2015-16. In this case, Amit will be eligible for deduction under Section 80E of Income Tax Act from Finacial Year 2015-16.

New Income Tax Slab for Financial Year 2015-16 as per Budget 2015 February 28, 2015

Deductions under Section 80G of Income Tax Act for Donations March 2, 2015



File Income Tax Return Online

in quick steps with Mytaxcafe.

Start E-Filing Now