Section 80E – Interest paid on a Education Loan

by Gopal Gidwani on August 20, 2009 · 15 comments

in Taxation,Uncategorized

• Under Section 80E of the Income Tax Act, the interest paid on an education loan is eligible for deduction from taxable income
• There is no upper limit to the amount that can be availed as deduction from taxable income for interest paid on the education loan. In short the entire interest amount is eligible for deduction from taxable income.
• The principal amount of the education loan is not eligible for any deduction from taxable income.
• The income tax benefit availed under Section 80E for interest paid on an education loan is independent of the amount availed under Section 80C of the Income Tax Act. In short this means the interest amount deduction that can be claimed under Section 80E is separate and the INR 1,00,000 deduction that can be claimed under Section 80C is separate. Both the benefits can be availed independent of each other.
• The interest benefit on an education loan is available for a total of maximum 8 years.
• The person availing the tax benefit need not compulsorily take the loan for him self to avail the tax benefit. The tax benefit can be availed for education loan taken for self, spouse or children. If the person has taken an educational loan for spouse, then the person himself can only claim tax benefit for the interest on the loan and not the spouse.

Please let us know your comments on the article by commenting in the section below or writing to us at gopal_gidwani@yahoo.com

{ 15 comments… read them below or add one }

B patil December 12, 2010 at 9:02 am

Dear Sr,

My self married in june 2010, My spouse was taken the loan in 2004.
Now she was not working, i would like to pay interest on spouse education loan.

can we get IT benefits also what is the max limit we can pay.

Reply

Gopal Gidwani December 12, 2010 at 9:23 am

Mr. Bahubali,
The income tax benefit is given only to the person who took the loan. So if your wife has taken the loan then the income tax benefit will be given only to her. Had you taken the loan for yours wife’s education then you will be allowed to claim tax benefit on it. But since the loan is in your wife’s name, the income tax benefit can be claimed only by her.

Also regarding your query on maximum tax benefits on education loan, the entire interest amount on the education loan can be claimed as dedcution from taxable income.

Reply

Amu December 17, 2010 at 5:27 pm

Hi,

I took education loan to study between 2007-2009. In FY 2009-2010 (in Dec 2009), I repaid the entire loan. Interest accrued from 2007-2009 (Dec) was 1,00,000 & interest accrued in FY 2009-10 was 20,000.

Do I get tax exemption on the entire interest paid on the loan (1,00,000) or only on interest accrued in FY 2009-10 (20,000)?

Reply

Gopal Gidwani December 19, 2010 at 5:45 am

Hello Amu,

I am not very clear about your query. But from whatever I have understood I will try to answer in one sentence. In case of an education loan whatever interest you have paid in a financial year you can claim that amount as deduction from your taxable income. Hope that answers your query. If not then please explain your query properly as I could not follow exactly what you wanted to ask.

Reply

Amu December 19, 2010 at 3:16 pm

Thanks for replying Sir.

I ll explain my question again – I did not start any repayment during the study period of 2 yrs. During the study period, simple interest of Rs 1 lac was accrued. 6 months after completing my studies, in the next FY (2010), I repaid the entire loan (principal + interest accrued during study + interest accrued during holiday period).

My question is that since I repaid the interest of the previous 2 years of study period in the next FY (2010), can I claim tax benefit on the interest accrued during study period as well? The bank is currently giving me an interest certificate of only interest accrued during the next FY (2010) saying that only the interest accrued in the year of repayment is tax examptible.

Reply

Tushar Saxena December 28, 2011 at 12:24 pm

Hi,

I have the same query.

I took loan of 2,31,000 during 2004-07.

I started paying (but irregularly) from 2008. In july 2008, there is one more interest that bank charged, worth 76000. They said that this amount is interest occured during 2004-07.

In FY 2011-2012, I paid 2,89000 and closed the account. Which has 13000 interest of this FY. That clearly indicates that in 2,89,000 there is interest of 13000 (current FY) and interest of previous years as well.

Can I claim the interest of previous years that I paid this FY?

Bank is providing certificate with interest occured during this FY (13,000)

Please help!!!!

Thanks,
Tushar

Reply

Gopal Gidwani January 9, 2012 at 12:48 pm

Hello Tushar,
If the bank is providing interest certificate for only FY13 then I am not too sure if you will be able to claim the tax benefit on the interest for previous years. I suggest you consult an income tax expert on this matter.

Reply

Sneha December 10, 2015 at 5:01 am

Hi Amu
I am now facing the same issue you faced. What was the resolution? I also want to know if I can claim deduction for the interest accumulated in the previous 2 years

Reply

jyothsna.k February 23, 2011 at 8:02 am

sir i took education loan in 2004-2006 ofr my PG . After that i got married , presently i am not an employe but husband was doing a small job in private sector , we r not naving any properties we r financially too poor to pay loan . but the bank pepole they r very much harasing us to pay the loan . sir can keep a petision on them that we cant pay loan
please show me the way

Reply

Gopal Gidwani March 2, 2011 at 10:01 am

Hi Jyothsna,

You can discuss with the bank higher authorities and explain to them your situation. They will consider it and put a moratorium on the loan. If you feel the bank people are harassing you too much then you can file a complaint against the bank with the banking ombudsman

Reply

geetha July 12, 2011 at 11:15 am

i got the education loan for my MCA in 2007-2010. but im not working now… i want to cancel the interest of education loan in 2009-2010… is the cancelling scheme is over in july 20th 2011? which procedure of this scheme?

with regards,
geetha……………………

Reply

Gopal Gidwani July 13, 2011 at 10:30 am

Hello Geetha,

I am not aware of which interest cancellation scheme on education loans you are talking about. If you can tell me few details of the scheme then I may be able to comment on it.

Reply

Ankit August 12, 2011 at 10:44 am

hi,
i have 1 query that i took loan from 2006 to 2010 of 1,5 L .so now i am filling my emi every month of 3,500 .so for a year its total of 42 k .so waht i need to declare means my interest or principle or both for a year..

Reply

Gopal Gidwani August 14, 2011 at 8:43 am

Hello Ankit,
Under Section 80E of the Income Tax Act you will get income tax benefits only for the interest part of the Education Loan EMI. The certificate that will be given by your bank will include the total amount paid as EMI for the financial year. It will also include the break up of the EMI in terms of how much portion is the principal and how much portion is the interest. You need to submit this certificate to your employer. Accordingly the employer will reduce your taxable income by the amount of the interest paid on the education loan.

Reply

Satyanarayana October 12, 2012 at 1:45 pm

I have taken education loan for my son . I have not started paying the installments. Please clarify whether I can claim tax rebate on accrued interest for the year 2012-13

Reply

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