Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
29 November 2012An employee of our organisation is also pursuing higher studies and has taken loan from bank to fund it. Naturally, he is paying interest on loan.
Is deduction under section 80E allowable to him.
Regards,
Anil Sankar V
(CA)
(1877 Points)
Replied 29 November 2012
Deduction in Respect to Repayment of Education Loan
If you have taken an education loan from any financial institution or an approved charitable institution, Section 80E provides a tax deduction on the loan interest that you are paying.
Who is Eligible?
Individual assesses only. So, if you are part of an HUF, this deduction cannot be claimed by you.
Deduction Limit
The entire interest paid on the education loan could be used to claim a deduction. There is no cap on the deduction amount. However, one needs to remember, that there is no tax benefit on the principal repayment of the loan.
Scope of Deduction
The loan should be taken for the sole purpose of higher education. It could either be for the individual, spouse or children. Loans for the higher education of siblings, in-laws, nephew or niece, will not qualify for any deduction. Also, from assessment year 2010-11, deduction could be claimed for the student for whom the individual or assessee is the legal guardian.
The education loan should be taken from either a financial institution or an approved charitable trust. Loans taken from friends, employer or relatives do not qualify for a deduction.
CA Pooja Agarwal
(Chartered Accountant)
(3228 Points)
Replied 29 November 2012
yes obviously he can claim deduction u/s 80 E
CA jatin k Gohil
(CA Practice)
(95 Points)
Replied 29 November 2012
You can take deduction of interest amount for 8 years only.
CA Pooja Agarwal
(Chartered Accountant)
(3228 Points)
Replied 29 November 2012
yes obviously he can claim deduction u/s 80 E
CA P.Vasudeva Rao
(B.Com, ACA)
(88 Points)
Replied 29 November 2012
I studied in some case that deduction u/s 80E available only for FULL TIME course.
praveen
(Chartered Accountant)
(6971 Points)
Replied 29 November 2012
deduction is available in case the course is full time.
Dipjyoti Majumdar
(CA in service & CS. dipmaj@ rediffmail.com )
(3468 Points)
Replied 30 November 2012
Thanks for all the responses.
However, the term "higher education" has been defined in section 80E(3)(c). No where in the definition there is reference to full time study. Earlier there was a reference to full time study which has been amended by FA 2009.
So, in the light of the above, I guess taking a view that an employee doing full time job and pursuing higher studies (by attendance or through distance learning mode) and eligible for deduction will not be depriving the revenue.
Request your thoughts.
Prakash Jha
(Executice Accounts)
(36 Points)
Replied 30 November 2012
Sure deduction of interest is allowable to him
as it is not necessary for assessee to only study (and not work) to claim the deduction u/s 80E
@VaibhavJ
(Believe!! Live your dreams!)
(33516 Points)
Replied 30 November 2012
Hi,
Basic Ideal of legsilature was that if person is persuing higher education then Bank is giving loan with an option to start repayment after 2/3 yrs depending upon course tenure, so that once higher studies is completed & student gets the Job, he can pay loan from his earned salary without being burden to their guardian.
However, "higher education" means any course of study 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;]
So it talks about courses taken after SSC, it is no where mentioned that it should be full time & part time, but it should be recognised by the 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.
Jiral Savla
(Senior)
(35 Points)
Replied 03 December 2012
Whichever is EARLIER
CAclubindia
