karan (professional) (300 Points)
16 July 2010I have query on 80E- Please suggest
1. If a person is paying a interest on education loan of his daughter - is the amount eligible for excemption from his salary if yes how much and under which section
2. if a person is paying a interest and principle for educational loan of his daughter - is the amount eligible for excemption from his salary if yes how much and under which section
kindly advise
CA.G.Muguntha Narayanan
(Internal Auditor at TVS Motors)
(2195 Points)
Replied 16 July 2010
Dear karan,
Madhusudan Kabra
(knowledge seeker)
(1779 Points)
Replied 16 July 2010
Dear narayanan / karan ,
i think defination of higher education is revised now higher education means to any course pursued after 12th .
Additionaly following points :
CA.G.Muguntha Narayanan
(Internal Auditor at TVS Motors)
(2195 Points)
Replied 16 July 2010
thank you for the infor provided Mr.Kabra
SUDHIR & PRADEEP JI
(CA FINAL+LLB + DISA)
(2299 Points)
Replied 16 July 2010
Interst paid alone is deductible under section 80E. The higher education shall be pursued by the assesse himself or his/her spouse or his children.
but not for principal amount.
vivek
(CA)
(74 Points)
Replied 16 July 2010
Only the interest amount which you paid during the year is allowable and there is no limit.
Nitin Grover
(CS)
(1228 Points)
Replied 16 July 2010
| Originally posted by : MADHUSUDAN KABRA | ||
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Dear narayanan / karan , i think defination of higher education is revised now higher education means to any course pursued after 12th . Additionaly following points : 1-These deduction is available only to individual and not for H.U.F. 2-Deduction amount-The deduction amount is only the interest paid on the loan of higher studies and there is no limit. You can get tax benefit on entire amount of interest paid but not the PRINCIPAL. 3-Deduction only will be available if interest is paid out of tax chargable income. 4-Deduction only be available if the loan is taken from financial institutes or approved charitable institutes. Loan taken by family or relatives not included. 5-Loan should be taken for higher studies means any full time course of graduate or post graduate course. After +2 full time course would be eligible for it. 6-Deduction available only to self or dependant like spouse & children. From A.Y 2010-11Relative also includes student for whom the individual is the legal guardian 7. Deduction period: – Deduction 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 is paid by the assessee in full, whichever is earlier.The maximum tenure to get the tax benefit is 8 years. 8-The study can be anywhere in the world and not neccessary to be in india It can be claimed for eight years in a row, beginning from the year when the interest payment starts Regards Madhusudan Kabra |
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Agree with Madhusudan (as per latest amendment).
Principal Amount deduction is not available because the amount u take then paid and Tution Fee is allowed u/s 80C so principal is not allowed.
Regards
Dear
Deduction under section 80E for Interest on education Loan taken for self and relatives
Have you taken an education loan to support higher studies of yourself or of your spouse, Children or for the student of whom you are legal guardian and you are not aware of the tax benefits that you are entitled to. Then here is a guide that will assist you to know tax benefits on education loans. These benefits help you to reduce the overall cost of your education loan.
The deduction under section 80E is available to an individual if following conditions are satisfied:
1. Deduction available only to Individual not to HUF or other type of Assessee.
2. Deduction amount: – The amount of interest paid is eligible for deduction and moreover there is no cap on the amount to be deducted. You can deduct the entire interest amount from your taxable income. However there is no benefit available on the repayment of principal amount of the loan.
3. Deduction available if Interest is been paid during the previous year and was paid out of income chargeable to tax which means if repayment is made from income not chargeable to tax than deduction will not available.
Note: – Earlier to previous year 2006-07 the above deduction was available only for Interest on loan taken and repaid by the assessee for his own studies.
4. Interest should have been paid on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education. Interest on Loan taken from relatives or friends will not be eligible for deduction under section 80E.
a. approved charitable institution means an institution specified in, or, as the case may be, an institution established for charitable purposes and [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 Gazette, specify in this behalf;
5. Loan should have been taken for the purpose of pursuing higher studies of Individual , Spouse, Children of Individual or of the student of whom individual is legal Guardian.
Higher studies means full-time studies for any graduate or post-graduate course in engineering, medicine, management or for post-graduate course in applied sciences or pure sciences including mathematics and statistics;
Income tax department has added (W.e.f. A.Y. 2010-11) additional fields of studies (including vocational studies) pursued after passing the Senior Secondary Examination or its equivalent from any school, Board or University recognised by the Central or State Government will also be covered under deduction in respect of interest paid on loan taken for higher education.
6. Interest should have been paid for the loan taken for the purpose of pursuing his higher education or of the spouse and children. From A.Y. 2010-11 Relative also includes student for whom the individual is the legal guardian.
7. Deduction period: - Deduction 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 is paid by the assessee in full, whichever is earlier.
The tax benefits on education loan are only valid once you start the repayment and moreover they are only available up to eight years. For instance if your loan tenure exceeds eight years, you cannot claim for deductions beyond eight years.
Hence it is better that the education loan is repaid within eight years. Unless if the loan amount is very high and it is difficult to afford a high amount of equated monthly installment (EMI), one should not opt for education loan with longer tenure.
*Initial assessment year means the assessment year relevant to the previous year, in which the assessee starts paying the interest on the loan.
8. Loan should be in the name of Individual: - Deductions on education loan can only be claimed if the loan has been taken in your own name. If your parents, spouse or sibling has taken the loan for your studies, then you are not entitled to get tax benefit.
9. The loan includes not only tuition or college fees but also other incidental expenses for pursuing such studies like hostel charges, transport charges etc.
10. Repayments of education loan NOT covered under Section 80C.
11. There is no condition that the course should be in
Regards
K.Ilayaraja
GSTR 9 and 9C for FY 23-24 as amended by Notification 12/2024 dated 10th July 2024(with recording)
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