Close
Close

Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Term

Protect Your family’s financial future with Kotak e-Term. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and insurance in one premium. Know more

Kotak e-Invest

Insurance and investment in one plan with Kotak e-Invest. Know more

Close

Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

Section 80E: Tax Exemption on Interest on Education Loan

The "interest component" of a loan taken for a person's higher education is tax deductible under Section 80E. Under this clause, educational loans taken for graduate study in either India or abroad are both deductibles.

  • Nov 28, 2019
  • 5,907 Views

    Key Takeaways

  • The individual may claim this deduction for himself, his spouse, his children, and any person over whom he has legal custody. The person making the loan repayments for the aforementioned individuals is eligible for an 80E deduction.
  • If the parents split the EMI payments, then the parent paying the majority of the interest can claim that portion of the EMI and the remaining portion can be claimed by the subscriber.

Demographically, India has one of the biggest youth populations combined with a large number of educational institutions. As the economy continues to grow and incomes increase, spending on education is also witnessing a boost. Education expenses account for the second-highest category in a middle-class Indian household. Several people opt for education loans to fund studies, and Section 80E of the Income Tax Act 1961 helps you reduce your taxes when you opt for such a loan.

Section 80E of the Income Tax Act

According to this section, the interest paid during the financial year on the education loan is eligible for tax benefits. The income tax deduction under Section 80E may be claimed for education loans taken for yourself, your spouse, children, and any students for whom you are a legal guardian.

The tax benefits under this section are available only on loans availed from a financial institution or a charitable trust. If you avail of a loan from your relative or friend and pay interest on the same, the 80E deduction benefits are unavailable.

Charitable institutions for this purpose include universities or educational institutes established for education purposes and are non-profit organizations. These may also include institutions or trusts, which are established for religious or charitable purposes, and are prescribed by the commissioner of Income Tax (Exemptions) or Director-General.

Deduction under Section 80E

Having understood what is Section 80E, you need to know that the benefits are available only on the interest component and not on the principal amount on the Equated Monthly Instalment (EMI). You may claim such deductions from the first repayment date and continue using the benefits for seven more years. This means the 80E deduction limits are available for a total period of eight years.

The meaning of higher education as per Section 80E

The section defines higher education as studies pursuant to completing the Senior Secondary Examination or its equivalent. Moreover, the board or the university must be state or government-approved. The course should be a full-time or a vocational program took up after completing the Senior Secondary Examination. Interest paid on an education loan availed for pursuing an international course after completing the Senior Secondary Examination is also eligible for benefits under this section.

Who can claim deduction u/s 80E?

Eligibility for tax deduction under Section 80E

The following are the eligibility conditions for receiving an income tax deduction under Section 80E of the Income Tax Act of 1961:

1. This tax deduction is available solely to individuals; firms and Hindu Undivided Families (HUF) are not eligible. Furthermore, loans from relatives and friends are not eligible for the advantage under this section of the Income Tax Act.

2.Only the interest paid on an education loan is eligible for the Section 80E Income Tax Deduction.

3. This deduction is available to both parents and children. This means that the individual repaying the education loan, whether a kid or a parent, is eligible for the deduction.

4.The deduction is only applicable for loans used for higher education.

5.The Income Tax Exemption under Section 80E is available exclusively to the individual who takes the loan and is required to pay the taxes.

The permitted deduction is the total interest on the EMI paid in a fiscal year. There is no cap on the maximum deduction amount, but an individual must obtain a certificate from their bank to do so. This certificate should provide separate descriptions of the interest rate and principal amount of the education loan for that fiscal year. In this case, there will be no tax benefit for the principal amount; instead, the interest will be eligible.

The quantum of deduction under Section 80E

Section 80E income tax benefit is available only on the interest paid on the education loan. However, there is no upper limit on the amount that may be claimed during the eligible period. You need to procure a certificate from your lender to claim the deduction. It must clearly show the principal and the interest components within the EMI. The interest paid on the education loan must be through your income during the financial year.

Which are notified financial institutions under section 80E?

According to Section 80E, the money used to pay interest on a student loan must come from a financial institution or a non-profit organisation that has been approved. There is no other company from which a loan may be obtained that qualifies for the deduction. These establishments can be recognised as follows:

Financial institution: A financial institution is any bank operating in accordance with the rules outlined in the Banking Regulation Act of 1949, according to the law.

Charity institution: A charitable institution is an organisation that possesses the authority referred to in Section 10’s clause 23C.

What is the period/time limit for claiming a deduction?

A maximum of 8 Assessment Years may be claimed for the deduction under section 80E. However, if you shut the loan account earlier, the income tax deduction. will be valid for the remaining portion of the loan’s active duration.

For instance, you started paying interest on your student loan in Academic Year 2019–20.

For AY 2019–20 through AY 2026–27, you can make a deduction in this situation under Section 80E. (i.e. 8 assessment years).

Documents required to claim tax deduction under Section 80E

The following document is necessary to claim the tax deduction under Section 80E of the Income Tax Act of 1961:

1.An individual must obtain a certificate from the recognised bank or financial institution, or charity institute from which the loan is obtained.

2.This certificate must have separate sections for the principal and interest amounts of the education loan taken out for the fiscal year.

The benefit is available for a period of eight assessment years under the assumption that the course would be complete and the loan would be repaid within this time. Often, education loans may provide a moratorium of six months to one-year post completion of the course. Therefore, repayment may commence only after the end of the moratorium period. In such cases, the benefits will be available from the assessment year when the first repayment is made and seven additional years.

FAQs on section 80E

Can I claim a deduction for the principal and interest amount of the EMI which I am paying for an education loan under 80E?

No, the principal amount of an EMI is not deductible under section 80E. Only the interest portion of the EMI may be deducted.

How much amount can I claim as a deduction under this section?

Three subsections are used to classify tax deductions under Section 80CCD: Contribution of the Employee According to Section 80CCD(1): a maximum of 10% of employee salaries or 20% of gross annual income (for self-employed individuals). The maximum is ₹1.5 lakh.

I want to avail higher education loan for my child, who will study abroad. So can I get a deduction under 80E?

Yes, you can submit a section 80E deduction even if your child is enrolling in normal and vocational courses while studying overseas for a higher education degree..

Is Section 80E part of Section 80C?

The Income Tax Act’s Section 80C allows for a deduction for education-related tuition costs. However, the Income Tax Act’s Section 80E allows for a deduction for interest paid on student loans taken out for higher study..

Can deduction u/s 80E be availed if the loan is taken for higher studies at a foreign university?

No, a loan must be obtained through an Indian financial institution or a certain Indian charity organisation to qualify for the income tax deduction under section 80E.

Download Brochure

Features

  • Increasing Life Cover*
  • Guaranteed^ Maturity Benefits
  • Enhanced Protection Through Riders
  • Tax Benefits
  • Dual Benefits: Guaranteed^Maturity + Death benefits

Ref. No. KLI/22-23/E-BB/999

T&C

Download Brochure

Features

  • Enhanced Protection Through Riders
  • Life Cover
  • Tax Savings
  • Multiple Premium Payment Terms
  • Guaranteed @ Loyalty Addion
  • Accrued Guaranteed @ Additions

Ref. No. KLI/22-23/E-BB/490

T&C

- A Consumer Education Initiative series by Kotak Life

Similar Articles

Easy ways to make personal savings plans

When Should TDS be Deducted and Who is Liable to Deduct it?

8 Things to Help You Select a Savings Investment plan

How Inflation Affects Savings and Investment?

How to e-Verify your Income Tax Return

What is the Last ITR Filing Date and Penalty for Late Filing of ITR?

How can I get Form 16B from traces?

What is Section 80C Deduction Limit?

Save Income Tax by 31st March: Here Is a Checklist

What is the difference between TDS and TCS?

Tax Benefits for Startups in India

Money Saving Tips for Single Women

What is the Maximum Maturity Benefit in Assured Savings Plans?

Tax Planning and Tax Benefits of Life Insurance

What is TDS Exemption Limit?

Insurance and Endowment: Everything You Need to Know!

Who Should Invest In Savings Plan

Challan 280 - How to Use Challan 280 to Pay Income Tax

What is ITR & How to File Income Tax Return?

How to create a savings plan and make good investment choices

Tax Saving for Self Employed in India

Tax Deductions You MUST Know

What is Tax Deduction at Source (TDS)?

Income Tax Exemption for Physically Handicapped Dependent

How to save tax for salaried person?

How To Invest In Guaranteed Return Plans For Higher Returns And Financial Security?

Income Tax Filing For NRI in India

Tips to plan your savings in 2022

3 Tips to Buy Guaranteed Savings Plan

What is Salary Protection Insurance and Why You Need It

Budget 2019: Impact on the Common Man in India

धारा 80सी आयकर अधिनियम, 1961

Tax Exemption and Scope of Coverage

ITR 2 Form – Complete Guide

What is EEE in income tax? 5 tax-free investment options to become crorepat

How to Download Form 16?

Section 80D - Medical and Health Insurance Tax Benefits Under Section 80D

Highlights of the Union Budget 2023-24

Types of Income Tax Return (ITR) Forms

What is a savings plan?

Can You Get Term Insurance Without Income Proof?

All You Need To Know About Assured Savings Plan

Union Budget 2023: Impact on Life Insurance

LTC Cash Voucher Scheme October 2020 – Everything You Need to Know

What is Section 195 of the Income Tax Act? TDS on Non-Residents of India

Section 16 of the Income Tax Act (ITA), 1961

Saving Income tax in 2017 - 18

How to View 26AS and Download Form 26AS Online

Why January Is an Important Month for Saving Tax?

What is Tax Evasion and What Are The Penalties For Tax Evasion In India?

How to File Form 10E for Tax Relief on Salary Arrears?

Have You Considered Term Insurance a Part of Your Tax Planning?

How To Save Tax Using Life Insurance?

Impact of GST on Life Insurance in India

Things to Do After Filing Income Tax Returns

Should one prefer a guaranteed savings plan over monthly income schemes?

A Guide to Life Insurance Policy’s Tax Benefits and Taxability

What Investment Options Come with Tax Incentives?

Tax-Savings Investments and Options in India

Income Tax Filing Using Multiple Form 16

Guide for Tax Calculation on your Salary

Saving Plans to Give Children a Debt-free College Education

Tax Saving Options for Salaried Employees

What is the Difference between Form 16 and Form 16A?

Difference Between Guaranteed and Assured Returns

Tax Saving Options other than Section 80C

Union Budget 2023 and Tax Exemptions on Life Insurance Premium Over ₹5 Lakhs

धारा 80डी आयकर अधिनियम, 1961

What is Form 16B?

Best Savings plan for the middle class in India

Income Tax Deductions for Disabled Persons Under Section 80U

Plan your Daughter's Wedding With Best Monthly Savings Plan

How Do Assured Savings Plans Work and Why You Should Consider One?

What is Section 10D of the Income Tax Act?

Pradhan Mantri Suraksha Bima Yojana

How To Save Tax Better with 80C

Investment Proofs You Need Submit To Lower TDS Cut From Your Salary

Why Tax Planning Should Be an All-year Round Activity

Top 8 Tax-Saving Methods in India- Budget Planning

Section 80G of the Income Tax Act

Section 10 (10d) of Income Tax Act, 1961 on Payouts of Life Insurance Policy

Why PAN Card is Essential for Income Tax Filing?

Tax Saving Tips: Best Ways to Save Income Tax for 2021

Difference Between Guaranteed Savings Plan and Guaranteed Income Plan

ITR-6: Guide to filing ITR-6 Form online

What Is Advance Tax and How Is It Calculated?

Post Office Savings Scheme - All You Need to Know

How to File Income Tax Return - Everything You Need to Know

Received an Income Tax Notice? Your Guide to Understanding Intimations under Section 143 (1)

Income-Tax Liability- The Difference Between Gross Income & Total Income in Calculating Income Tax

How to File TDS Return?

5 Popular Tax-Saving Schemes in India

All about TDS Payment Online & Due Dates

What are the Different Types of Taxes in India?

Understanding Tax Exemptions in ULIP (Old and New)

Tax Saving Guide for 2019-20

Penalty For Late Filing TDS Return

What To Do If Your TDS Is Not Deposited With The Government?

What is the TDS Rate on Salary?

List of Important Income Tax FAQs

Income Tax Benefits for Doctors

Financial Planning and Best investment options for Housewives

What is Form 26AS - All You Need To Know

Section 44AD of Income Tax Act for AY 2021-22

How to Get Form 16?

How to File Form 16 for Salaried Employees?

Form 16, Form 16A, and Form 16B?

What is the Difference Direct Tax and Indirect Tax

How Much Money This Budget 2019 Can Help You Save

What is Rule 132 of Income Tax? How Does it Affect You?

Difference between Section 80C, 80CCC, 80CCD & 80D

All you need to know About Tax on Inheritance

Investing Lump Sum Amount

Presumptive Taxation for Business and Profession

Importance of Savings Plan You Need to Know

12 Tax Changes in Budget 2022 that May Impact Your Personal Financial Planning

Sub-sections Under Section 80C of the Income Tax Act, 1961

How to file Form 16 online?

आयकर रिटर्न (आईटीआर) फॉर्म के प्रकार

ITR 1: Sahaj Form

Understand ITR4 Form: How to Fill, Structure & Determine Your Eligibility

How to Check Income Tax Returns Status Onine?

Guaranteed Return Plans-Why is it a must for you?

Is PF Withdrawal Taxable for NRI?

What is the Percentage of Tax Deducted at Source (TDS)?

How to Save Income Tax with Insurance

What is the Difference between Assessment Year (AY) and Financial Year (FY)?

What is HRA (House Rent Allowance) and How is HRA Exemption Calculated?

What is indirect tax and its types?

What is TDS Slab?

Tax Planning Tips for a Newly Married Couple

9 Unusual Investments you Didn't Know for Saving Taxes in India

A Comprehensive Guide to Understand the ITR 7 Form

What is Section 80CCC of the Income Tax Act 1961

How can NRIs prevent double taxation in India?

Types of Riders in Insurance Policy

Financial Benefits and Government Schemes Every Woman in India Should Know

How to Check Income Tax Refund Status Online in India

How to File ITR Online

A Complete Guide for Filing ITR 3 Form

Tax Structure in India

Income Tax Deduction Under Section 80CCC In India

E-Filing of Income Tax Returns in India

Tax Benefits of ULIP Plans Available for NRIs

भारत में महिलाओं के लिए सरकारी योजना

How much gold can you keep at home? Limits and income tax rules explained

Tax Season is Coming- Know How to Save Tax

Complete Savings Plan for Low Income Earners

Home Investment Plan to Buy Dream Home

सुकन्या समृद्धि योजना (SSY) के कर लाभ क्या हैं?

What are Direct Taxes? How to Avoid being Overtaxed?

How to Claim a Tax Refund?

How to e file ITR on Income Tax Government Portal

इनकम टैक्स रिटर्न कैसे फाइल करें?

All about TDS on Salary under Section 192 – Kotak Life

How to File Income Tax Return for First Time Tax Payers

Maximize Your Savings: Tax Tips for Salaries Above ₹20 Lakhs

What is capital gains tax, and how it works?

Income Tax Slabs and Rates in India for FY 2021-22/AY 2022-23

Basics of Guaranteed Savings Plan

Everything You Need to Know About Tax Benefits of National Pension Scheme (NPS)

All You Need to Know About Section 80C

Do Beneficiaries Pay Taxes on Life Insurance?

Personal Finance - Meaning, Importance, and Tips for Personal Finance

How to Save Tax on Salary Arrears?

How Should I Allocate A Monthly Savings Plan For Long-Term Benefits?

Are Financial Planning and Tax Planning the Same Thing?

What is Section 80C Deduction?

Tax Rate Chart for FY 2022-2023: What is TDS Slab?

How to Calculate returns on an assured savings plan?

Income Tax Exemption for Disabled

Why is Form 16 Important?

How to File Income Tax Return without Form 16

52 Weeks Savings Plan: Daily Savings Plans for a Better Tomorrow

Tax Benefit of Investing in Term Plan

Income Tax Deductions Under Section 80C

Invest in Tax-Free Bonds: Understanding the Benefits and Who can Invest?

How to create wealth through a savings plan?

Income Tax Calculator: How Life Insurance Policies are Taxed? Explained

How to Check Income Tax Refund Status Online in India

How to Pay Advance Tax Online in India

What are Deferred Savings Plans?

What is Section 80C - Explained in Detail

What is ITR 5 Form and How to File ITR 5?

What is TDS Refund Process?

Problems People Face with Tax Returns after a Job Change

Should you prefer a Guaranteed Savings plan over monthly income schemes?

आयकर स्लैब 2021-2022

TDS rules on the sale of jointly owned property

Income Tax Deductions & Exemptions under Sections 80C, 80D & 80DDB for FY 2021-22 & 2022-23

TDS Due Dates of FY 2022-23 For Return Filing

Tax-Free Income in India

Interest Imposed Under Sections 234A, 234B and 234C

9 Income Tax Myths That Could Cost You Money while Filing returns

How to Boost Your Savings with Guaranteed Results

What is Form 16A?

Section 80C Deductions as per Income Tax Act, 1961

प्रत्यक्ष कर और अप्रत्यक्ष कर में क्या अंतर है?

How to View 26AS and Download Form 26AS Online?