Section 80E
16 min read
80E Section: How to Claim the Tax Credit for Qualified Retirement Savings
Subhasmita Behera
Posted on
Section 80E

The 80E education loan deduction is a tax benefit for people who take a loan to pay for higher studies. This deduction can only be used for the interest paid for the loan, not the principal amount of the loan. The Education Loan deduction can be claimed for up to eight years, beginning with the year interest repayment starts.

Eligibility for 80E deduction

The tax deduction for student loans can only be claimed on the interest portion of the loan.
Individuals are the only ones who can deduct education-related expenses. Hindu undivided families or organizations can't use the 80E deduction.
To qualify for the 80E deduction, the education loan must come from a recognized financial institution or a charitable organization and not from a friend or relative of the taxpayer.
Higher education almost always requires the student to take out loans. Taxpayers, their spouses, or their children can claim this deduction.
You have up to eight years to submit your tax return and claim your deduction.

Who is eligible to claim the student loan deduction?

The tax deduction for interest paid on a student loan can only be claimed by an individual borrower. There is no way for a HUF or any other type of taxpayer to obtain it.
The individual should utilize the loan money to pay for their own higher education, the education of their spouse or children, or the education of a student for whom they are the legal guardian.
Parents can easily claim this deduction for the student loan that was taken for their children's higher education.

Deduction under section 80E

The whole interest portion of the EMI paid during the financial year can be deducted from the total amount of the EMI. The maximum amount that can be deducted isn't limited at any point in time.
On the other hand, you will have to get a certificate from your bank. The percentage of the education loan you paid towards the principal and the portion that went towards the interest during the financial year should be clearly defined on such a certificate.
A deduction equal to the whole amount of interest that was paid will be permitted. There is no tax benefit associated with the repayment of the principal.

Deduction period

The year that you begin making payments towards the loan is the beginning of the year that is evaluated for the interest deduction on the loan.
It is only available for a period of eight years, beginning with the year in which you start repaying the loan and ending whenever the interest is completely paid back, whichever comes first.
This indicates that a tax deduction will only be granted for a period of 5 years rather than eight years if the full payment of the loan is made in the allotted time of 5 years and not eight years.
It is also important to know that if the duration of your loan is more than eight years, you will not be able to deduct the interest that was paid on that portion of the loan. Therefore, it is always recommended that a student loan be paid off within eight years of receiving it.

Where may one apply for a loan for education?

You can claim a tax deduction under section 80E if the loan comes from a bank, financial institution, or an approved charitable organization. This deduction does not apply to any money you borrowed from family or friends to pay for your higher education expenses.

The reason for taking an education loan

If the loan was specifically for higher education, you may be eligible for a tax deduction. It makes no difference if a student wishes to pursue higher education in India or elsewhere and take a loan to do so.
All subjects of study that are followed after completing the senior secondary examination or an exam with a similar difficulty level are considered higher studies. It encompasses both general education and vocational at the same time.

Try TaxSpanner Today
TaxSpanner offers an end-to-end tax compliance solutions to individuals, Professionals and Businesses.
... is one of India’s largest and most trusted websites that offers online preparation of accounts books and filing of TDS, GST, individual Income Tax Returns (ITR). Established in 2007, TaxSpanner is based out of New Delhi. Since then, it has grown to build very large customer base in this market segment.