10 Mar 2018

Section 80 E - Deductions

Finance feed by:

CA Sushil Modi
M.com,CA
CA in Job    •    17 Year 11 Month  experience

Deductions under 80E is allowed for repayment of educational loan. If an individual has taken education loan and is repaying it then he can claim a deduction on the Repayment of interest on the Education loan under section 80E of the Income Tax Act.

Section 80E only enables the Repayment of interest not repayment of the principal amount of education loan. Therefore, at the time of filing income tax returns, the amount of interest that is repaid is claimed as a deduction.

It is important to note that this deduction U/S 80E does not carry any cap and is over and above the deduction U/S 80C in which an individual can claim ₹1,50,000 exemption under various heads and investment instruments.

However this deduction can only be claimed by an individual who has taken an education loan for higher education of himself or their spouse or children or legal ward i.e. the person of whom he is the legal guardian. This deduction cannot be claimed by Hindu Undivided Family.

Deduction U/S 80E can be claimed immediately starting from the year when the individual started paying the interest on the loan in addition to 7 subsequent years i.e. a total period of 8 years or till the time the individual repays the interest in full, whichever is earlier.

Deduction U/S 80E cannot be claimed on Loans taken from friends or family or from financial institutions outside India. It is very important that the loan is taken from a Registered Financial institution or Charitable institution in India, only then U/S 80 E the deduction can be claimed.

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