If a person takes education loan,he has to repay both principal and interest.
This deduction is only for Interest repayment
Deduction available in 8 years starting with the year repayment of Interest starts
Suppose loan taken on 1.6.2012 but Repayment starts from 1.6.2014
Then deduction will start from Financial Year 2014-15 onwards till 2021-22
Suppose in 2014-15,Rs 100000 Total amount repaid (60000 Principal +40000 Interest),then Deduction is available in Section 80E only of Rs 40000
(1) This deduction is for Interest paid on
Higher education means any course pursued
after passing Senior Secondary Examination (Class XII)
of any board or similar by CG /SG /approved authority.
(3)This loan may be taken for EDUCATION OF
(a) Assessee himself
(b)or Relative (Relative means children,spouse,legal guardian)
It doesnt matter whether relative is dependent or not
(3) Deduction is only for Individual (Not for Others like HUF)
4) Loan must be taken from
(a) Any financial institution (bank etc.)
(b) Any charitable institution (approved)
5) This interest must be paid from his income chargeable to tax otherwise deduction not available
Mr. B has taken three education loans on April 1, 2015, the details of which are given below:
|Particulars||Loan 1||Loan 2||Loan 3|
|For whose education loan was taken||B||
|Purpose of loan||MBA||B. Sc.||B.A.|
|Amount of loan||5,00,000||2,00,000||4,00,000|
|Annual repayment of loan||1,00,000||40,000||80,000|
|Annual repayment of interest||20,000||10,000||18,000|
Compute the amount deductible under section 80E for the A.Y. 2016-17.View Answer
All 3 loans are eligible for deduction
Deduction is only for Interest amount i.e. 20000+10000+18000=48000
During the financial year 2015-16, Amit paid interest on loan availed by him for his son's higher education. His son is already employed in a firm.
Will Mr. Amit will get the deduction under section 80E.View Answer
Son is covered in definition of relative.
it does not matter whether son is dependant or not