Section 80E: Deduction of Interest on Education Loan

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Section 80E of the Income Tax Act, 1961 is a provision that offers tax benefits on the repayment of education loans. It allows individuals to claim deductions on the interest paid on loans taken for higher education purposes.

Here are some key points about Section 80E:

Eligible Loans: Section 80E applies to loans taken by individuals for pursuing higher education for themselves, their spouse, children, or for a student for whom the individual is a legal guardian. The loan must be taken from a financial institution or an approved charitable institution for the purpose of higher education.
Duration of Deduction: The deduction under Section 80E is available for a period of up to 8 consecutive years or until the interest on the loan is fully repaid, whichever is earlier. The deduction starts from the year in which the individual starts repaying the loan and continues for the subsequent seven years.
Deduction Limit: There is no upper limit on the deduction amount under Section 80E. Individuals can claim a deduction on the entire amount of interest paid on the education loan during the eligible period. However, the principal amount of the loan is not eligible for any deduction.
Courses Covered: The deduction is applicable for loans taken for full-time or part-time courses pursued after completing senior secondary examination (12th grade) or equivalent. It includes courses in fields like medicine, engineering, management, applied sciences, and post-graduation courses, among others. The course should be recognized by a university, college, or institution recognized by the government or any competent authority.
Filing of Income Tax Return: To claim the deduction under Section 80E, individuals should file their income tax return and provide details of the interest paid on the education loan under section 80E. It is advisable to retain the loan statements and other relevant documents as proof of the interest paid.