Tax Benefits on Education Loan

Education Loan

Tax deduction on interest repayment on education loan is allowed with no upper limit. Benefit is allowed for courses above senior secondary pursued in India or abroad. Deduction allowed for a maximum of 8 years.

As per the IT Act, 1961, a tax assesse can avail benefit as stated in Under Section 80E of chapter VI-A, for repayment of Education Loan. If a tax payer is taken Education Loan, then it is eligible to claim tax rebate under Section 80E of IT Act for the interest incurred to Education Loan. Taxpayer can avail tax benefit for the Education Loan for higher studies taken for self or Spouse or Children. However, these courses must be pursued after completion of Senior Secondary Examination or its equivalent.

Condition to Claim

• Must be Individual Tax Payer and not HUF or any other kind of tax payer.
• The tax deduction is allowed for only interest paid on education loan.
• Loan is applicable to get higher studies for Self, Spouse or children.
• Loan has to take from Financial Institute or Approved Charitable Institution.

Maximum limit to avail tax benefit

There is not maximum limit to avail tax benefit on the amount of interest paid. The deduction is available for a period of 8 successive years or till the interest paid, whichever is earlier.

Things to know about Education Loan

• Tax benefit can only be claimed on interest occurred on Education Loan
• No upper limit to avail IT deduction in respect if interest on loan for higher education
• Can avail of tax benefit for self, Spouse and children or for legal guardian .
• Loan taken for study in abroad is also eligible to get tax rebate.

Documents Needed to apply for Educational Loan

* Proof of admission
* Proof of academic performance
* Schedule of fees
* Income statement (of parents)
* Statement of assets and liabilities
* Passport and visa if you are going abroad.

Using Loan EMI Calculator,To calculate total interest paid & total principal amount paid at the end of every financial year.
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