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[Notification No. 111/2022/F. No. 370142/32/2022-TPL] [Notification No. 49/2022/F.No.370142/6/2022-TPL]

Section 80E covers the deduction on the “interest component” paid on higher education loan from notified financial or charitable institution. Interest paid on education loan taken for higher studies of self, spouse, or children (including for whom you are legal guardian) can be claimed as a deduction from the taxable income.

Person who can claim deduction u/s 80E

This deduction on repayment of education loan can be claimed by:
individual for self, spouse, children, and a person for whom he / she is a legal guardian. The individual who is repaying the loan for the above mentioned people can take benefit of 80E deduction. If your parents are sharing the EMI payments, then the extent to which parents are paying interest part of EMI can be claimed by them and rest by you subject to fulfilment of other conditions.

Deduction amount u/s 80E

There is no maximum or minimum deduction limit specified under section 80E. The amount of deduction on interest payment deduction is not impacted by the rate of interest charged by the financial or the charitable institution, amount of loan or any other factor. This section provides a deduction on the actual interest amount paid during the financial year.

To avail benefit u/s 80E the loan should be availed from

Financial institution – A banking company to which the Banking Regulation Act, 1949 applies (including any bank or banking institution referred to in section 51 of that Act); or any other financial institution notified by the Central Government; or

Charitable institution – An institution approved for the purpose of section 10(23C) or 80G(2)(a).

Period/Time limit for claiming deduction

The deduction under section 80E can be claimed for a maximum of 8 Assessment Years. In case you foreclose the loan account sooner, the income tax deduction will be available for such reduced time period in which the loan was active.

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