Deduction for Interest on Education Loan [Section 80E]
• Section 80E allows individuals to claim deduction for interest paid on an education loan taken for higher education for themselves or their relatives. ‘Relative’ of an individual means his spouse, his children or the student for whom he is the legal guardian
• Higher Education means any course pursued after passing the Senior Secondary Examination or equivalent from recognized institutions, including vocational courses.
• Deduction allowed for the entire amount of interest paid during the financial year. No deduction for repayment of principal.
• Deduction available for a maximum period of 8 assessment years starting from the year interest repayment begins.
• However, if the entire interest is paid before expiry of 8 years, no deduction shall be allowed for any assessment year after the year of full payment.
• To claim deduction, the loan must be taken from any bank, a notified financial institution, or any approved charitable institution.