Section 80E Interest on Education Loan

If a person takes education loan,he has to repay both principal and interest.

This deduction is only for Interest repayment

 

Deduction available in 8 years starting with the year repayment of Interest starts

 

Suppose loan taken on 1.6.2012 but  Repayment starts from 1.6.2014

Then deduction will start from Financial Year 2014-15 onwards till  2021-22

Suppose in 2014-15,Rs 100000 Total amount repaid (60000 Principal +40000 Interest),then Deduction is available in Section 80E  only of Rs 40000

 

 

(1) This deduction is for Interest paid on

      Education loan

            for

      Higher education

(2)

Higher education means any course pursued

after passing Senior Secondary Examination (Class XII)

 of any board or similar by  CG /SG /approved authority.

(3)This loan may be taken for EDUCATION OF

     (a) Assessee himself

     (b)or Relative (Relative means children,spouse,legal guardian)

It doesnt matter whether relative is dependent or not 

(3)  Deduction is only for Individual (Not for Others like HUF)

4) Loan must be taken from

     (a) Any financial institution (bank etc.)

     (b) Any charitable institution (approved)

5) This interest must be paid from his income chargeable to tax otherwise deduction not available

EXAM QUESTIONS 

Q1

Mr. B has taken three education loans on April 1, 2015, the details of which are given below:

Compute the amount deductible under section 80E for the A.Y. 2016-17.

Q2

During the financial year 2015-16, Amit paid interest on loan availed by him for his son's higher education. His son is already employed in  a firm.

Will Mr.  Amit  will get the deduction under section 80E.