InvestorQ : I have taken an education loan and now I have been placed in a good company. Is there any deduction available on the interest paid on loan?
Pavithra Prabhakaran made post

I have taken an education loan and now I have been placed in a good company. Is there any deduction available on the interest paid on loan?

Answer
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krithika Saxena answered.
1 year ago


An individual taxpayer is eligible for deduction under section 80E, to claim deduction under this section one has to satisfy the following conditions:

Such an education loan is taken for higher studies in India or outside India. (Higher studies include all the fields of study pursued after passing the senior secondary examination or its equivalent exam, includes both regular and vocational courses.)
The loan should be taken from any bank / financial institution or any approved charitable institutions. Loans taken from friends or relatives don’t qualify for this deduction.

Deduction Amount:
The deduction allowed is the total interest part of the EMI paid during the financial year. There is no limit on the maximum amount that is allowed as deduction. You, however, need to obtain a certificate from your Bank. Such certificate should segregate the principal and the interest portion of the education loan paid by you during the financial year. The total interest paid will be allowed as a deduction. No Tax benefit is allowed for the principal repayment.

The deduction for the interest on loan starts from the year in which you start repaying the loan. It is available only for 8 years starting from the year in which you start repaying the loan or until the interest is fully repaid whichever is earlier.