In This post we will discuss issue relating to deduction u/s 80E for eduction loan for higher studies.We will try to cover all point relating to eduction loan ,but if any left or you have a different opinion than us ,you can record it in comment section given below.
relevant clause of section are reproduced hereunder for ready reference :
80E. (1) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education or for the purpose of higher education of his relative.
from above main points to avail the deduction are
- Eduction loan should be taken by Assessee.
- The amount eligible for deduction is repayment of eduction loan interest.
- There is no limit for amount of repayment of interest.Unlimited amount of interest can be deducted under this section.
- This deduction is available in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest is paid by the assessee in full, whichever is earlier.
- Initial Assessment year means previous year in which assessee starts paying the interest amount.
- The loan should be taken for the purpose of higher eduction,and higher eduction means " any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognised by the Central Government or State Government or local authority or by any other authority authorised by the Central Government or State Government or local authority to do so;
- The loan should be taken from any financial institution or any approved charitable institution.(in simple main Banks are covered)
- The loan should be taken for higher study of himself or studies of relative
- Relative under this section means the in relation to an individual, means the spouse and children of that individual the student for whom the individual is the legal guardian.
- Earlier to previous year 2006-07 the above deduction is available for loan taken and repaid by the assessee himself for his studies only but after finance act 2007 ,"the deduction is available for the purpose of higher education of his relative also.relative, in relation to an individual, means the spouse and children of that individual or the student for whom the individual is the legal guardian.
- There is no deduction available for repayment of principal ,this deduction is available to only for interest repayment.
- This deduction is available for individual only and not for other type of assessee .
- The loan should be for pursuing higher studies means loans taken not only for tuition or college fees but also loan taken other incidental expenses for pursuing such studies like hostel charges,transport charges etc etc is also covered under this deduction,
- There is no condition that the course should be in India .
- 80 E (deduction on Interest on study loan) was available to parents and person himself but now after finance act 2009(2) it is available to Legal guardian also.
[Deduction in respect of interest on loan taken for higher education.80E. (1) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education or for the purpose of higher education of his relative.(2) The deduction specified in sub-section (1) shall be allowed in computing the total income in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest referred to in sub-section (1) is paid by the assessee in full, whichever is earlier.(3) For the purposes of this section,—(a) “approved charitable institution” means an institution specified in, or, as the case may be, an institution established for charitable purposes and 88[approved by the prescribed authority] under clause (23C) of section 10 or an institution referred to in clause (a) of sub-section (2) of section 80G;(b) “financial institution” means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or any other financial institution which the Central Government may, by notification in the Official Gazette89, specify in this behalf;(c) “higher education” means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognised by the Central Government or State Government or local authority or by any other authority authorised by the Central Government or State Government or local authority to do so(d) “initial assessment year” means the assessment year relevant to the pre-vious year, in which the assessee starts paying the interest on the loan;](e) “relative”, in relation to an individual, means the spouse and children of that individual or the student for whom the individual is the legal guardian.]
please read some hypothetical examples for clarification.
Qus: Ram has taken a Eduction loan for his higher studies on 20.06.2010 and started paying installments including interest from 20.06.2011.
Ans:In above example Ram will get tax benefit under section 8o E from p.y 2011-12 i.e initial year of payment and next seven year i.e upto previous year 2018-19 or upto full payment of loan which ever is earlier.
Ques:Ram has taken a loan for his higher studies on 20.06.2011 and paid 20000 interest in previous year and his father has paid 15000 interest payment in previous year 2011-12.who can claim benefit of deduction.
Ans:Only ram will be eligible for deduction of 20000 rs .His father is not eligible for deduction the reason behind this is that loan has been taken by the Ram and not by his father as mentioned in point one above ,though his father is satisfy the condition of relative and paid the interest also but he has not taken the loan
Ques:Can son /daughter can claim the benefit of deduction for loan taken for higher studies of his /her father/mother.
Ans: No,on the reverse ,parents can claim the benefit for payment of interest for higher studies of their children.
Ques:Ram has taken a loan for his higher studies ,and has repaid the laon interest amount but unfortunately he has not succeeded in exams and could not complete his higher studies.
Ans:As per section loan should be for "pursuing his higher education or for the purpose of higher education of his relative"and ram has pursued the higher course so he should be eligible for the deduction as he has fulfilled all the conditions and there is no condition that the course assessee has persuaded should b completed or assessee should be passed definitely in the course the main dedmand of the section is purpose of the loan should be higher eduction and it should be drawn and used for the purpose of higher studies for his or his relatives.
.
Now in the current year student paid a sum of Rs.40000/= to the bank towards interest. The interest accrued for the current year is Rs.13,000/= only. The rest of interest accrued for the previous years. On what amount can he/she claim the exemption:-
a. on the whole amount of Rs.40000/- or
b. on the interest payable for the current year only i.e. Rs.13,000/=
Ans:80 E deduction is available on payment basis ,in present case 40000 is allowed as per section 80E
please comment
my son taken education loan. i am the guarantor of the loan. whether i am eligible for 80E relief for the payment of interest for education loan. kindly clarify.
ReplyDeleteIn our opinion you can not claim 80E as the loan must be on your name
DeleteYou can actually claim it as the name of the guarantor appears on the papers given by bank as well.
DeleteMy wife and I both take loan jointly for further studies of son. During the year, we pay Rs 10,000 as interest to bank. Both can claim Rs 5,000 each deduction u/s 80-E?
ReplyDeleteyes ,amount has been paid by both of you then you can claim 5000 each.
DeleteI am Mehul i have taken education loan on year 2006-07 and start paying interest on 2009-10 year and still also paying , how will i get advantage of 80E, please guide me some procedure for it.
ReplyDeleteYou can deduct amount of interest paid from your income under section 80E in income tax return without any limit. No maximum restriction placed.
DeleteI am Vishal. I am paying interest for my brother's education loan. Can i claim 80E?
ReplyDeleteIf you are legal guardian of Your brother then you can claim deduction u/s 80E
DeleteHello,
ReplyDeleteI took an education loan of Rs.1,25,000/- in installments from Dec,2008 to Feb,2010 (in each semester) for persuing my M.Tech and started paying interest for the loan amount from the next month (i.e., Jan, 2009). After completion my M.Tech in July-2010, I have joined in the job and started paying an EMI of Rs.5,000/- till now which includes Principal amount and interest. But the real issue is that i don't know about tax benefit of education loan till today, now i want to claim and get refund for the last 2 years. Is this possible?
I am repaying a education loan barrowed my wife before my marriage. At the time of our marriage she has completed the B.Tech degree but the repayment started only after our marriage. In this case can I claim exemptions under 80E? (Note: She was not my dependant when she barrowed the loan/completed the course)
ReplyDeleteNo , you can not .
DeleteNot being it had been taken by your wife before marriage but the reason is that 80E benefit is available only to the person who has taken the loan .
In present case loan is taken by your wife so she can only claim the deduction ,if she paid the same .
Hi, I work in a PSU Bank. I had taken an Education Loan for my only Son. My Son completed his Graduation (B.Tech) during December 2011. In the month of March 2012, my Son took up a Job with a monthly salary of Rs.10,000/-. The Repayment started during April 2012. I am paying an EMI of Rs.8000 per month because I don’ t want my Son to reel under financial burden. However, my Son quit the job after 3 months i.e., during June 2012 to pursue higher studies. However, I am continuing to make EMI payments towards education loan from my Salary. I tried to offer the same to my employer/bank to consider it as deduction under section 80E. But, my employer refuses to consider it citing invalid deduction. My query is whether I am entitled to claim Education Loan rebate u/s 80E which I had taken for my Son because I am genuinely paying the same from my salary ? (No Father would want his child to start his career with a pile of debt.)
ReplyDeleteyes , you are 100 % eligible to claim the deduction u/s 80E . But deduction is restricted to interest paid part only.
Deletepls confirm the reason why they say that deduction is not allowed to you ?
The Education Loan is in the name of my Son, because he is the student and I am the co-borrower. All Education Loans will be in the name of Students only and the parents are added as co-borrowers. While fixing the repayment, I told my employer that he has taken up a job, but for 3 months only. Even if he earns money, I will pay the EMI. How can any bank or lender expect the kids to pay to loan at the start of their career when their salary is abysmally low. The Bank says that my son can claim deduction under section 80E. What a Joke. My son's annual salary will not be more than even the threshold/exemption limit, so no point of tax. What is the point of availing deduction when his taxable salary does not cross the threshold limit. Can I directly apply deduction while filing IT returns or how do I make my employer convince.
DeleteIf you are borrower they why you say that loan is in the name of SON. Co borrower means that loan is on joint name . You should ask bank to update name in loan account and claim deduction.
DeleteAs per section benefit can be claimed by the person who has taken the loan from the bank.
In your case loan has been taken by both of you (co borrower) so both of you are eligible to claim the deduction.
The Education Loan will always be in the name of the Student pursuing the higher studies. The parent will be designated as Co-borrower. The annual Interest Certificate will be issued in the name of Student and simultaneously mentioning father name as co-borrower. All Banks follow the same designation i.e., student is the borrower and father is the co-borrower. My query is whether father as co-borrower can claim deduction.
ReplyDeleteAs per income tax act parents can claim deduction ,
Deleteand as per bank instruction ,loan can be given on student name .
so if we agree with your employer ,then parents can never claim the deduction,
But this is not correct ,in our view being a co borrower ,parents can claim deduction
sir,
ReplyDeleteMy son (Borrower) and myself (Coborrower & Father) availed a education loan of Rs.20.00 lacs from a nationlised bank for my sons MS course in USA. I have availed a sum of Rs. 8.50 lacs now and the balance will be availed as per the requirement of the university (every semester).At present interest is being charged in the account, which is around Rs.9500.00 per month. I am servicing the same very regularly.
The question is whether i am entitilled to avil the advantage of SECTION 80 E of IT Act.That is supposing the annual interest applied in the loan account is Rs.66500.00 and amount paid is Rs.66500.00 then i am eligible to deduct Rs.66500.00 from my annual income...
thank you and regards....
sir,
ReplyDeleteMy son(Borrower)and myself(Coborrower & Father)have availed an education loan from a nationalised bank for my sons MS in USA.The quantum of loan sanctioned by the bank is Rs.20.00 lacs to be repaid in 180 months after completion of studies.We have availed so far Rs.8.50 lacs and the monthly interest is Rs.9500.00 per month presently, which will increase depending on the avilement of loan.I am paying /servicing the interest regularly.Sofar Rs.66500.00 has been debited in the account and the same has been serviced by me.
My question is
1) whether i am entitled to avail the benefit of Section 80 E.since the course what he is doing is after BE and not after Higher secondary education.
2)if i am eligible How much amount can be deducted from my elegible income? Is it Rs.66500.00 can be deducted from my income?
thank you and regards
i have taken education loan in 2008-09 of 50000, firt i have taken 21530 in 2008 and then draw remaining 28530 in 2009 and paid interest of 21530. then in 2010 ihave started paying but tlill ihave not claimed any tax benefit. now can i claim whole intrest paid from 2008 in this year?
ReplyDeleteyou can claim interest in the year of payment it self not in the later year. So in currant Financial year you can only claim interest paid during the fy 2012-13
DeleteSir,
ReplyDeleteMy son(Borrower) and me(co borrower) has taken education loan of 3,00,000 in 2008 from Bank of India and the total amount we took only 2,62,550 as required for the B.Tech. I paid interest of initial 2 year but as I have no fix income source due to some family problems I could not pay the interest, initially I paid interest on the rate of 10.75% but now bank manager is saying that interest rate is floating and i.e. 13.5% presently and course of my son has been completed in June 2012 but presently he has no job so that I am not able to pay the interest and manger is pressuring to pay the interest we are saying to give us time but they are pressuring to pay the interest and the amount so please tell me about the interest rate of Bank of India
You should write letter to Bank Manager and request him to quote the rules under which such rates are applicable. Further you can meet senior bank officials .
Deletehi
ReplyDeletesir,
ReplyDeleteI have taken education loan for my B.tech(2002-2006),till now i did't pay any interest.Now in 2012-2013 i want to do one time settlement with bank.The amount i have taken is 1,60,000/-.I was doing settlement for 2.2L.
Can i claim deduction for this amt,If so how much amount?
yes , you can claim amount in excess of principal as interest in present year(payment year)
Deletein given case you can claim 2.2-1.6=60000 as deduction under section 80E
I took an education loan of 987000.00 from one of the public sector banks for study period of 2010-12 and my moratorium ended in October 2012. I paid nothing during study period but in month of October 2012(before end of moratorium) I paid a sum of 267700. Accrued interests for year 2010-11, 2011-12 and 2012-13 (till date) are 39000, 104000 and 86000 respectively. I am asking my bank for interest certificate but they are giving a certificate which states that only 86000(current year's interest) out of the entire repayment is interest payment and remaining is principal repayment. So in such a case how can I get benefit on accrued interest of year 2010-11 and 2011-12.
ReplyDeleteIs the deduction applicable for the eductaion loan taken to pursue Part time Higher studies, from a premier institue in India. Will i be able to deduct the Interest paid towards this education loan from my Total Income?
ReplyDeleteHi,
ReplyDeleteI had availed an education loan for higher studies in 2010. My father paid the interest during the year 2010-2011 and availed tax benefit for the same. I completed my education in 2011 and started working from 2012 and over the last year have been repaying the loan with interest. The loan statements shows
Account Name: MY NAME
Joint Holders: FATHER's NAME
Suppose I have paid an interest amount of Rs. 150,000, can I avail the tax benefit under 80E for some part of the amount (say, 100,000) and my father on the remaining? Is this allowed?
If allowed, do I need to get a separate Annual Interest certificate from bank for myself and my father so that we both can avail the benefit? Please advise.
Thanks!
It is better if Bank can issue both of you separate certificate . There is no doubt to us that both of you can claim interest deduction according to payment made by both of you against interest.
DeleteHi
ReplyDeleteI have take a loan form State Bank of Travancore (Rs.35,000) during 2006-2007 financial year. I haven't paid any interest till 2012.Now i am willing close the loan in this month ie Jan 2013.
The total closing loan amount is near Rs.70,000/-.
Can i claim deduction for this amt,If so how much amount?
You can claim Interest amount paid during the year.So interest amount included in 70000 is eligible for deduction.You should get certificate from bank about interest amount.
DeleteCan income tax exemption be given to an employee who has taken two education loans for one son at a same time?
ReplyDeleteyes he can claim interest on both the loans
DeleteI took my loan on 2007 for 3.5 lacs of which in this FY , I repaid 1.51 lacs .Also the moratorium intt amounted to 1.65 lacs and the intt pertaining to this FY is 53000. How much am I entitled for exemption from tax?
ReplyDeleteP.S.-this is the first year for my loan repayment
Interest amount paid irrespective to year which it relates to is eligible for deduction u/s 80E
DeleteIn you case interest amount is paid 1.65+0.53=2.13 Lakh If actually paid
I took a loan from Citibank, US, for my MBA which I completed in Dec 2006. I shifted back to India last year and continue to pay back the loan in dollars from my savings there. I am working here now. How can I benefit from this provision? Can I get annual loan statement from Citibank and submit with my Income tax filing to claim benefit for the interest paid?
ReplyDeleteloan should be taken for studies in approved institutions and loan must be taken from specified financial institution .In your case both these points are not fulfilled so you can not claim deduction u/s 80E
DeleteHi,
ReplyDeleteI have taken an educational loan in a private bank in the year 2008 for amount of 1,50,000. My father paid the few interest (Not full interest for the year) amount while i am studying till 2010 and later he couldn't pay due to few problems. In the year 2011, i have paid few interest amounts. Then in june 2012 i paid the amount of rupees 80,000 (Overall payment i have made towards loan is 1,10,000). Currently, i am married and quit my job and am willing to do a one time settlement. The overall payment now shows as 1,00,000. Is it possible to make an one time settlement with lower amount? If so, till how much i can get the deduction for the final payment?
Sir,
ReplyDeleteMy mother had taken loan for Master degree and she had been paying the interest amount since 2010. I am a married man aging 29 with one kid but currently unemployed. The loan is in my name with my mother as co-borrower. Whether my mother can avail tax exemption under 80E ?
Regards,
In that case the actual amount accumulated for the current year i.e. 13000/- not the actual paid Rs.40000/- only exempted by computer generated certificate not for the actual amount paid by the individual. In Andhra Bank I faced same Problem. Is there any universal guidelines to the banks issued by the Income Tax Department of India
ReplyDeleteI took an education loan from a US bank while I was living there. I am currently employed in India, but I am still paying for the loan. Is there any provision under which I can claim this education loan for tax deduction in India?
ReplyDelete