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doubt in section 80E

Nitin Hotchandani (student) (100 Points)

22 September 2010

Repayment of interest on loan taken for part time studies for graduate course in management are eligible for deduction u/s 80E or not ???

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V CHANDRA SEKARA RAJU (CA FINAL) (908 Points)
Replied 22 September 2010

According IT Act, 1961

Any amount paid towards interest on loan borrowed from any financial institution or any approved charitable institution for the purpose of pursuing higher education is deductible.

Higher Education means full-time studies for any graduate or post-graduate course in engineering, medicine, management or for post-graduate course in applied science or pure sciences including mathematics and statistics.

Soooo

Part - time education is not eligible for Deduction

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SHWETA GERA (Financial Services) (938 Points)
Replied 22 September 2010

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 India.

Hope you got your answer.....

Nitin Hotchandani (student) (100 Points)
Replied 23 September 2010

but in book v.k.singhina nd yogendra bangar they give deduction under section 80E for part time studies also.............

Renu (Article) (Accountant) (77 Points)
Replied 23 September 2010

Intt. paid on laon for full time education is deductible u/s 80E

ReevCA (Absolute Carnage ) (145 Points)
Replied 23 September 2010

In Simple Words.. Only full time education loan interest only allowed as a deduction U/s. 80E.. No Part time Educations allowed in this section...

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Manoj BG (Tax Professional and in Service) (1795 Points)
Replied 23 September 2010

100% SURE THAT ONLY FULL TIME SPECIFIED EDUCATION COURSES WOULD BE ELIGIBLE FOR DEDUCTION UNDER SEC 80E.

REGARDS,

MANOJ

Kiru.G (Article Assitant) (273 Points)
Replied 23 September 2010

part time education is not eligible

Santosh (Student ( Final Year - New )) (348 Points)
Replied 23 September 2010

Originally posted by : Manoj B. Gavali
	100% SURE THAT ONLY FULL TIME SPECIFIED EDUCATION COURSES WOULD BE ELIGIBLE FOR DEDUCTION UNDER SEC 80E. REGARDS, MANOJ

CA. K K Singh (Group Head-Pre Audit) (29 Points)
Replied 24 September 2010

Can i claim 80E dedution for loan taken by myself as co-borrower for my brother full time MBA course

Mohammad Asif (chartered accountant) (191 Points)
Replied 03 November 2010

dear no interest is allowed as deduction under section 80E on part time studies it only includes full time education

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CMA. CS. Sanjay Gupta ("PROUD TO BE AN INDIAN") (114225 Points)
Replied 30 November 2010

Deduction u/s. 80E for educational loan extended to loan for vocational courses and studies in all streams including commerce and art

The Government has extended tax concession on interest paid for educational loan to all streams of studies including vocational courses, benefiting students from all economic strata opting for higher studies, from this academic session onwards.

The concession was till now restricted for graduate and post-graduate courses in engineering, medicine, management and post-graduate courses in applied sciences or pure sciences including mathematics and statistics.

“The latest amendment in section 80E of the I-T Act will bring all the streams of education (apart from regular ones) and vocational courses under its ambit. This will benefit the students who apply for graduate and postgraduate courses in various streams during the upcoming academic session,” a senior Finance Ministry official said.

It will help all such students who take up vocational courses and studies in streams of arts and commerce. Till now this concession was only allowed for regular courses in engineering, medicine, management and pure and applied sciences, the official said.

The new arrangement will be applicable for 2009-10 financial year and help students who take loans for studies during assessment year 2010-11 and the subsequent years, the official said.

With the amendment in Section 80E (deduction allowed in respect of interest on loans taken for pursuing higher education) of the Income Tax Act, the new clause in the I-T Act will “extend its scope to cover all 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 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.”

Interestingly, the I-T concession on such a loan will also be extended to parents who have legally adopted a child.

“This will encourage parents to adopt a child without worrying for the expenses of the child’s studies. An individual can take a loan under this category for his or her spouse or children too,” the official said.

“Further, the scope of the term ‘relative’ has also been expanded in relation to an individual to mean the spouse and children of that individual or the student for whom the individual is the legal guardian,” the latest I-T amendment for section 80E states.

Section 80E of I-T Act provides for a deduction to an assessee, being an individual, on account of any amount paid by him in the previous year by way of interest on loan taken from any financial institution or any approved charitable institution for the purpose of pursuing higher education in specified fields of study.

Source:https://taxguru.in/income-tax/deduction-us-80e-for-educational-loan-extended-to-loan-for-vocational-courses-and-studies-in-all-streams-including-commerce-and-art.html

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doubt in section 80E

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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;

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;

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 India.

Hope you got your answer.....

Deduction u/s. 80E for educational loan extended to loan for vocational courses and studies in all streams including commerce and art

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