If you have taken an education loan and you are repaying the same, then you can save a lot of tax money. The interest paid on availing education loan can be deducted from the total income under Section 80 E of the Income Tax Act, 1961. The point to note is that the deduction under section 80E is only provided for interest part of the EMI and not for the principal part of the EMI.
Who Can Claim Deduction Under Section 80E?
Deduction under Section 80E of the Income Tax Act can be claimed for following-
- Only individual can claim this deduction
- The education loan should be taken for higher education for self, spouse or children for whom the individual should be the sole and legal guardian
Eligibility Criteria to Avail of Section 80E Benefits
Below given are the eligibility criteria for availing Section 80E benefits-
- Education loan availed for higher education purpose only
- Loan should be obtained from a financial institution such as banking company operating under Banking Regulation Act, 1949 or any institution specified in an official gazette by the state/central government
- Any education loan availed from a charitable institution are eligible for Section 80E tax benefits until and unless the institution is approved under Section 10 (Clause 23C) or Section 80G of the Income Tax Act, 1961
What is the Limit Under Section 80E?
There is no limit on the maximum amount which is allowed as deduction under section 80E.
Documents Required to Avail of Section 80E Benefits
There are no such particular documents required to avail of Section 80E tax benefits at the time of filing Income Tax Returns. However, one need to keeps some of the documents handy in case Income Tax Department asks for in future-
- Education loan agreement sanctioned by the financial institutions
- Repayment statements and interest certificates from the lender
Section 80 E: FAQs
Yes. You can claim benefits under Section 80E of the Income Tax Act, 1961, if you have taken education loan to study outside of India.
No. Companies can’t claim tax benefits under section 80E.
Currently, there is no maximum limit to the tax deduction under Section 80E.