Home > Blogs > Education Loan Tax Benefits

Education Loan Tax Benefits- Section 80E & 80E Deduction

Post Date:- January 15, 2025
Author:- Shiva Krishna HR

Share this Article

Table of contents

What is Section 80E of the IT Act?

What is the Eligibility for Education Loan Tax Benefits?

What are the 3 Main Benefits of Section 80E Deduction?

Claim Tax Deduction on Education Loan under Section 80E

Coverage of Section 80E

Conclusion

For taxpayers in India, like a parent or a student planning for a higher education within the country or abroad, education loans can prove to be a breather with substantial financial support. One of the advantages for individual borrowers in India is the deduction offered, that can be one of the main education loan tax benefits

This section eases the burden of taxpayers by letting them avail the TDS for the interest paid on the education loans to study abroad without any 80E deduction limit on the claim. In this blog post, let us see the tax benefits available under Section 80E, the eligibility criteria to apply for this benefit, and the advantages you can reap.

What is Section 80E of the IT Act?

This section gives the benefits of deductions on education loan tax by excluding the interest component of the loan repaid during that particular financial year. This deduction applies to individual taxpayers who have taken a loan for higher studies, either for their own benefits or for their family members. The tax deduction on education loan is available only on the interest paid and not on the principal amount to be repaid. This becomes an important advantage for students and the parents burdened with hefty interest payments on education loans.

What is the Eligibility for Education Loan Tax Benefits?

Section 80E is specifically formulated for individual taxpayers, meaning that only individuals, and no entities like companies or business, are eligible for this benefit.
The education loan must have been taken with a certain 80e deduction limit, from a recognized financial institution, like banks, NBFC or Non-Banking Financial Companies and any approved charitable institutions.
To avail of the education loan tax benefits, the loan must solely be for the purpose of higher education only, and it can be for a student pursuing higher education either in India or a foreign country.
Higher education, that is vocational and with regular classes after secondary education, is deemed fit as defined by the Income Tax Act to avail themselves of these benefits.
Another key point is that whoever is the loan recipient, must be the same individual claiming the tax deduction on education loan or for their spouse and children, or for those who he or she is the legal guardian.

What are the 3 Main Benefits of Section 80E Deduction?

The prevailing benefit of Section 80E is the tax deduction on education loan on the interest paid during that financial year. This means that the entire loan’s interest amount can be negated from your taxable income. This can reduce the burden of higher interest amount payable, especially for individuals who are in the early phase of repaying their loans.

In a few sections like that of Section 80C where there is a maximum cap, there is no cap on the Section 80E limit, on the amount of interest that can be claimed as a deduction. You can claim the entire interest paid that you have paid during the financial year, as long as the interest is paid diligently, and on time without any lapse while you have taken an education loan.

The Section 80E deduction is available for a maximum of 8 years from the year you start repaying the interest for your education loan taken. Though you have repaid your entire loan already, you can still claim the deduction for the coming first eight years of loan repayment period.

Claim Tax Deduction on Education Loan under Section 80E

You can get the education loan tax benefits by claim the tax deduction on education loan under this section by following a few specific procedures such as-

It is compulsory to provide the details of the education loan when you apply for your tax returns, such as your lender’s name and the interest amount you have paid for the year.

If you are a salaried individual, your current employer will help you with a Form 16, which is a detailed concise document of your salary and tax details.

If necessary, you may have to submit documents like the loan agreement document and interest paid receipts to support your claim for tax deduction on education loan.

This section does not impose a limit on the amount of deduction. This lets you claim the full amount of interest paid in that financial year.

Coverage of Section 80E

Among the education loan tax benefits of Section 80E covers the interest portion of the loan paid during the financial year. Here’s an example of how it works-

In this case, the individual’s taxable income comes down by the full amount of interest paid, giving the leverage of lower income tax liability.

Conclusion:

With the filing of ITR for your education loan under Section 80E you enjoy the benefits of tax relief as taxpayers repaying education loans. With a significant deduction on the entire interest amount paid during the financial year, it eases the monetary burden on you, while looking to invest in higher education, either for you or their family members. With no cap limit on the deduction on the interest paid as one of education loan tax benefits, you can make valuable use of it while studying abroad or India for your higher education.

To make the best use of the education loan tax benefits of Section 80E and reduce your tax liability, always be mindful of keeping the documentation of loan and interest payments handy. And if you are still looking for an education loan for studying abroad, reach QCK Loans for the best quotes and hassle-free loan disbursal.

With a thorough guidance on the education loan tax benefits from our collaborative partner CareerGyan, you will be equipped with all the information needed to avail the deductions on the education loan, giving you the financial benefits, and easing your burden while pursuing your higher education.

Ready To Level Up Your Future?

Get Your Education Loan in Just 3 Days!

Need Help in education loan

Trending Blogs

List of UK scholarships for Indian students in 2025

Top 10 Best Countries for MBA Studies

Latest article

uk scholarships for indian students

List of UK scholarships for Indian students in 2025

January 28, 2025

Studying abroad at a university at the UK is a dream come true for many students in India and being accepted to one of the top institutions for the same, seems like icing on the cake. This country houses some of the most prestigious institutes who offer UK scholarships for Indian students to pursue their higher studies.

best countries for mba

Top 10 Best Countries for MBA Studies

January 22, 2025

For all aspiring students looking to enhance their career options by getting an MBA qualification at a reputable institute abroad, here is a list you would like to go through. This article will give you a brief of the opportunities you have, to choose among the 10 best countries for MBA. A master’s degree in business management and administration will open multiple opportunities for a bright career, but getting this degree from one of these countries will seal the deal for you to have a successful career and lifestyle.

Scholarships for MBA Abroad

Scholarships for MBA Abroad: A Comprehensive Guide for Indian Students

January 8, 2025

For many Indian students, the chance of pursuing an MBA in a foreign country can result in a life that they have always hoped for. Getting an admission in a renowned international Business school, experiencing a foreign culture firsthand and expanding one’s global professional network is second to none.